UNITED STATES
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): December 1, 1995
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
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(Exact name of registrant as specified in its charter)
(Originator of the Prudential Securities Secured Financing Corporation Trust
1995-2)
Delaware 33-91148 133526694
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(State or other (Commission File (I.R.S. employer
Jurisdiction of Number) Identification No.)
Incorporation)
Prudential Securities Secured Financing Corporation
One New York Plaza
New York, New York 10292
(Address of principal executive offices)
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Registrant's telephone number, including area code: (212) 778-1000
Item 5. Other Events
On December 1, 1995, the Underwriting Agreement, dated December
1, 1995, by and between Prudential Securities Secured Financing Corporation and
Prudential Securities Incorporated, was executed and delivered by the respective
parties thereto. On December 6, 1995, the Pooling and Servicing Agreement dated
as of December 6, 1995 (the "Pooling and Servicing Agreement"), by and among
Irwin Home Equity Corporation, as servicer, Prudential Securities Secured
Financing Corporation, as depositor, and The Chase Manhattan Bank, N.A., as
trustee, was executed and delivered by the respective parties thereto. Also on
December 6, 1995, the Purchase and Sale Agreement dated as of December 6, 1995
(the "Purchase and Sale Agreement"), by and between Prudential Securities
Secured Financing Corporation, as depositor, and IHE Funding Corp., as seller,
was executed and delivered to the respective parties thereto. Finally, also on
December 6, 1995, the Mortgage Loan Sale Agreement, dated as of December 6, 1995
(the "Mortgage Loan Sale Agreement"), by and between IHE Funding Corp., as
purchaser, and Irwin Union Bank and Trust Company, as seller, was executed and
delivered to the respective parties thereto.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
(c) Exhibits
1.1 Underwriting Agreement, dated December 1, 1995,
by and between Prudential Securities Secured Financing Corporation, as
depositor, and Prudential Securities Incorporated, as underwriter.
4.1 Pooling and Servicing Agreement dated as of
December 6, 1995, by and among Irwin Home Equity Corporation, as servicer,
Prudential Securities Secured Financing Corporation, as depositor, and The Chase
Manhattan Bank, N.A., as trustee.
10.1 Purchase and Sale Agreement, dated as of
December 6, 1995, by and between Prudential Securities Secured Financing
Corporation, as depositor, and IHE Funding Corp., as seller.
10.2 Mortgage Loan Sale Agreement, dated as of
December 6, 1995, by and between IHE Funding Corp., as purchaser, and Irwin
Union Bank and Trust Company, as seller.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
(Registrant)
Dated: December 29, 1995 By: /s/ JOHN HEEGER
------------------------
Name: John Heeger
Title: Vice President
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Exhibit Page
1.1 Underwriting Agreement, dated
as of December 1, 1995, by and
between Prudential Securities
Secured Financing Corporation,
as depositor, and Prudential
Securities Incorporated, as
underwriter.
4.1 Pooling and Servicing Agree-
ment dated as of December 6,
1995, by and among Irwin Home
Equity Corporation, as
servicer, Prudential Securi-
ties Secured Financing Corpo-
ration, as depositor, and The
Chase Manhattan Bank, N.A., as
trustee.
10.1 The Purchase and Sale Agreement,
dated as of December 6, 1995,
by and between Prudential Securities
Secured Financing Corporation,
as depositor, and IHE Funding
Corp., as seller.
10.2 The Mortgage Loan Sale Agreement,
dated as of December 6, 1995, by
and between IHE Funding Corp., as
purchaser, and Irwin Union Bank
and Trust Company, as seller.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION TRUST 1995-2
MORTGAGE LOAN PASS-THROUGH CERTIFICATES
SERIES 1995-2
UNDERWRITING AGREEMENT
Dated as of December 1, 1995
UNDERWRITING AGREEMENT
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza
New York, New York 10292
December 1, 1995
Ladies and Gentlemen:
Prudential Securities Secured Financing Corporation (the
"Depositor") proposes, subject to the terms and conditions stated herein and in
the attached Underwriting Agreement Standard Provisions, dated as of December 1,
1995 (the "Standard Provisions"), between the Depositor and Prudential
Securities Incorporated, to issue and sell to you (the "Underwriter") the
Securities specified in Schedule I hereto (the "Offered Securities"). The
Depositor agrees that each of the provisions of the Standard Provisions is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this
Underwriting Agreement. Each reference to the "Representative" herein and in
the provisions of the Standard Provisions so incorporated by reference shall be
deemed to refer to you. Unless otherwise defined herein, terms defined in the
Standard Provisions are used herein as therein defined. The Prospectus
Supplement and the accompanying Prospectus relating to the Offered Securities
(together, the "Prospectus") are incorporated by reference herein.
Subject to the terms and conditions set forth herein and in the
Standard Provisions incorporated herein by reference, the Depositor agrees to
issue and sell to the Underwriter, and the Underwriter agrees to purchase from
the Depositor, at the time and place and at the purchase price to the
Underwriter and in the manner set forth in Schedule I hereto, the entire
original principal balance of the Offered Securities.
If the foregoing is in accordance with your understanding,
please sign and return to us two counterparts hereof, and upon acceptance hereof
by you, this letter and such acceptance hereof, including the provisions of the
Standard Provisions incorporated herein by reference, shall constitute a binding
agreement between the Underwriter and the Depositor.
Very truly yours,
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By: /S/ JOHN HEEGER
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John Heeger
Vice President
Accepted as of the date hereof:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ JOHN HEEGER
________________________________
John Heeger
Managing Director
SCHEDULE I
Title of Offered
Securities: Prudential Securities Secured Financing Corporation
Trust 1995-2, Mortgage Loan Pass-Through Certificates,
Series 1995-2, Class A Certificates (the "Offered
Securities"). The Trustee will simultaneously issue the
Class R and the Exchangeable Certificates representing
beneficial interests in the Prudential Securities
Secured Financing Corporation Trust 1995-2 (the
"Trust"). Only the Class A Certificates are offered
hereby.
Terms of Offered
Securities: The Offered Securities shall have the terms set forth
in the Prospectus Supplement and shall conform in all
material respects to the descriptions thereof contained
therein, and shall be issued pursuant to a Pooling and
Servicing Agreement to be dated as of the Closing Date
among the Depositor, Irwin Home Equity Corporation, as
Servicer, and The Chase Manhattan Bank, N.A., as
Trustee.
Purchase Price: The purchase price for the Offered Securities shall be
99.5046% of the aggregate principal balance of the
Class A Certificates as of the Cut-Off Date.
Specified funds for
payment of
Purchase Price: Federal Funds (immediately available funds).
Required Ratings: Aaa by Moody's Investors Service, Inc.
AAA by Standard & Poor's Corporation
Closing Date: On or about December 6, 1995 at 11:00 A.M. New York
City time or at such other time as the Depositor and
the Underwriter shall agree.
Closing Location: Offices of Skadden, Arps, Slate, Meagher & Flom, 919
Third Avenue, New York, New York.
Name and address of
Representative: Designated Representative: Prudential Securities
Incorporated.
Address for Notices,
etc.: One New York Plaza
New York, New York 10292
Attn: John Heeger
STANDARD PROVISIONS TO UNDERWRITING AGREEMENT
December 1, 1995
From time to time, Prudential Securities Secured Financing
Corporation, a Delaware corporation (the "Depositor") may enter into one or more
underwriting agreements (each, an "Underwriting Agreement") that provide for the
sale of designated securities to the several underwriters named therein (such
underwriters constituting the "Underwriters" with respect to such Underwriting
Agreement and the securities specified therein). The several underwriters named
in an Underwriting Agreement will be represented by one or more representatives
as named in such Underwriting Agreement (collectively, the "Representative").
The term "Representative" also refers to a single firm acting as sole
representative of the Underwriters and to Underwriters who act without any firm
being designated as their representative. The standard provisions set forth
herein (the "Standard Provisions") may be incorporated by reference in any
Underwriting Agreement. This Agreement shall not be construed as an obligation
of the Depositor to sell any securities or as an obligation of any of the
Underwriters to purchase such securities. The obligation of the Depositor to
sell any securities and the obligation of any of the Underwriters to purchase
any of the securities shall be evidenced by the Underwriting Agreement with
respect to the securities specified therein. An Underwriting Agreement shall be
in the form of an executed writing (which may be in counterparts), and may be
evidenced by an exchange of telegraphic communications or any other rapid
transmission device designed to produce a written record of the communications
transmitted. The obligations of the underwriters under this Agreement and each
Underwriting Agreement shall be several and not joint. Unless otherwise defined
herein, the terms defined in the Underwriting Agreement are used herein as
defined in the Prospectus and in the Pooling and Servicing Agreement referred to
below.
SECTION 1. THE OFFERED SECURITIES. Pursuant to the
applicable Underwriting Agreement, the Depositor proposes to sell to the several
Underwriters named therein certificates (the "Securities") representing
beneficial ownership interests in a trust (the "Trust"), the trust property of
which consists of a pool of home equity revolving credit line loans secured by
mortgages on residential one-to-four-family properties (the "Mortgage Loans" and
together with all other assets of the trust fund, the "Trust Fund"), including
(a) each Mortgage Loan and any additional mortgage loans which may be
transferred to the trust pursuant to the provisions of Section 6.11 of the
Pooling and Servicing agreement, dated as of December 6, 1995 (the "Pooling and
Servicing Agreement"), by and among the Depositor, Irwin Home Equity Corporation
(the "Servicer") and The Chase Manhattan Bank, N.A., as trustee (the "Trustee"),
(b) all rights of the Depositor under the Purchase and Sale Agreement, dated as
of December 6, 1995 (the "Purchase and Sale Agreement"), between Prudential
Securities Secured Financing Corporation and IHE Funding Corp., as Seller
thereunder, (c) such assets as from time to time are identified as REO Property
(as defined in the Pooling and Servicing Agreement) and collections thereon and
proceeds thereof, (c) all assets deposited in the Accounts (as defined in the
Pooling and Servicing Agreement), including any amounts on deposit in the
Accounts and invested in Permitted Investments (as defined in the Pooling and
Servicing Agreement), (d) the Trustee's rights with respect to the Mortgage
Loans under all insurance policies (other than the Certificate Insurance Policy,
as defined in the Pooling and Servicing Agreement) required to be maintained
pursuant to the Pooling and Servicing Agreement and any Insurance Proceeds (as
defined in the Pooling and Servicing Agreement), (e) all Liquidation Proceeds
(as defined in the Pooling and Servicing Agreement) and (f) all Released
Mortgaged Property Proceeds (as defined in the Pooling and Servicing Agreement).
The Securities will be issued pursuant to the Pooling and Servicing Agreement.
The terms and rights of any particular issuance of Securities
shall be as specified in the Underwriting Agreement relating thereto and in or
pursuant to the Pooling and Servicing Agreement identified in such Underwriting
Agreement. The Securities which are the subject of any particular Underwriting
Agreement into which this Agreement is incorporated are herein referred to as
the "Offered Securities."
The Depositor has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No. 33-
91148), including a prospectus relating to the Securities under the Securities
Act of 1933, as amended (the "1933 Act"). The term "Registration Statement"
means such registration statement as amended to and including the date of the
Underwriting Agreement. The term "Base Prospectus" means the prospectus
included in the Registration Statement. The term "Prospectus" means the Base
Prospectus together with the prospectus supplement specifically relating to the
Offered Securities, as first filed with the Commission pursuant to Rule 424, and
as further supplemented by the Prospectus Supplement dated December 1, 1995.
The term "Preliminary Prospectus" means a preliminary prospectus supplement
specifically relating to the Offered Securities together with the Base
Prospectus.
SECTION 2. OFFERING BY THE UNDERWRITERS. Upon the
execution of the Underwriting Agreement applicable to any Offered Securities and
the authorization by the Representative of the release of such Offered
Securities, the several Underwriters propose to offer for sale to the public the
Offered Securities at the prices and upon the terms set forth in the Prospectus.
SECTION 3. PURCHASE, SALE AND DELIVERY OF THE OFFERED
SECURITIES. Unless otherwise specified in the Underwriting Agreement, payment
for the Offered Securities shall be made by certified or official bank check or
checks payable to the order of the Depositor in immediately available or next
day funds, at the time and place set forth in the Underwriting Agreement, upon
delivery to the Representative for the respective accounts of the several
Underwriters of the Offered Securities registered in definitive form and in such
names and in such denominations as the Representative shall request in writing
not less than five full business days prior to the date of delivery. The time
and date of such payment and delivery with respect to the Offered Securities are
herein referred to as the "Closing Date."
SECTION 4. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS.
The respective obligations of the several Underwriters pursuant to the
Underwriting Agreement shall be subject, in the discretion of the
Representative, to the accuracy in all material respects of the representations
and warranties of the Depositor contained herein as of the date of the
Underwriting Agreement and as of the Closing Date as if made on and as of the
Closing Date, to the accuracy in all material respects of the statements of the
officers of the Depositor and the Servicer made in any certificates pursuant to
the provisions hereof and of the Underwriting Agreement, to the performance by
the Depositor of its covenants and agreements contained herein and to the
following additional conditions precedent:
(a) All actions required to be taken and all filings
required to be made by or on behalf of the Depositor under the 1933 Act and the
Securities Exchange Act of 1934, as amended (the "1934 Act") prior to the sale
of the Offered Securities shall have been duly taken or made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall be in effect; (ii) no proceedings for such purpose
shall be pending before or threatened by the Commission, or by any authority
administering any state securities or "Blue Sky" laws; (iii) any requests for
additional information on the part of the Commission shall have been complied
with to the Representative's reasonable satisfaction, (iv) since the respective
dates as of which information is given in the Registration Statement and the
Prospectus except as otherwise stated therein, there shall have been no material
adverse change in the condition, financial or otherwise, earnings, affairs,
regulatory situation or business prospects of the Depositor; (v) there are no
material actions, suits or proceedings pending before any court or governmental
agency, authority or body or threatened, affecting the Depositor or the
transactions contemplated by the Underwriting Agreement; (vi) the Depositor is
not in violation of its charter or its by-laws or in default in the performance
or observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it or its properties may be bound,
which violations or defaults separately or in the aggregate would have a
material adverse effect on the Depositor; and (vii) the Representative shall
have received, on the Closing Date a certificate substantially in the form of
Exhibit A attached hereto, dated the Closing Date and signed by an executive
officer of the Depositor, to the foregoing effect.
(c) Subsequent to the execution of the Underwriting
Agreement, there shall not have occurred any of the following: (i) if at or
prior to the Closing Date, trading in securities on the New York Stock Exchange
shall have been suspended or any material limitation in trading in securities
generally shall have been established on such exchange, or a banking moratorium
shall have been declared by New York or United States authorities; (ii) if at or
prior to the Closing Date, there shall have been an outbreak or escalation of
hostilities between the United States and any foreign power, or of any other
insurrection or armed conflict involving the United States which results in the
declaration of a national emergency or war, and, in the reasonable opinion of
the Representative, makes it impracticable or inadvisable to offer or sell the
Offered Securities or (iii) if at or prior to the Closing Date, a general
moratorium on commercial banking activities in New York shall have been declared
by either federal or New York State authorities.
(d) The Representative shall have received, on the Closing
Date, a certificate dated the Closing Date and signed by an executive officer of
the Depositor to the effect that attached thereto is a true and correct copy of
the letter from each nationally recognized statistical rating organization (as
that term is defined by the Commission for purposes of Rule 436(g)(2) under the
1933 Act) that rated the Offered Securities and confirming that, unless
otherwise specified in the Underwriting Agreement, the Offered Securities have
been rated in the highest rating categories by each such organization and that
each such rating has not been rescinded since the date of the applicable letter.
(e) The Representative shall have received, as of the
Closing Date, an opinion of Skadden, Arps, Slate, Meagher & Flom, as special
transaction counsel (the "Transaction Counsel"), dated the Closing Date, in form
and substance satisfactory to the Representative and containing opinions
substantially to the effect set forth in Exhibit A hereto.
(f) The Representative shall have received, as of the
Closing Date, an opinion of Skadden, Arps, Slate, Meagher & Flom, special
counsel for the Servicer, dated the Closing Date, in form and substance
satisfactory to the Representative and counsel for the Underwriters and
containing opinions substantially to the effect set forth in Exhibit B-1 hereto.
(g) The Representative shall have received, as of the
Closing Date, an opinion of Matthew F. Souza, counsel to the Seller, dated the
Closing Date, in form and substance satisfactory to the Representative and the
Transaction Counsel, and containing opinions substantially to the effect set
forth in Exhibit B-2 hereto.
(h) The Representative shall have received, as of the
Closing Date, an opinion of counsel for the Trustee, dated the Closing Date, in
form and substance satisfactory to the Representative and counsel for the
Underwriters and containing opinions substantially to the effect set forth in
Exhibit C hereto.
(i) The Representative shall have received, on or prior to
the date of first use of the prospectus supplement relating to the Offered
Securities, and on the Closing Date if requested by the Representative, letters
of independent accountants of the Depositor in the form and reflecting the
performance of the procedures previously requested by the Representative.
(j) [Reserved]
(k) The Depositor shall have furnished or caused to be
furnished to the Representative on the Closing Date a certificate of an
executive officer of the Depositor satisfactory to the Representative as to the
accuracy of the representations and warranties of the Depositor herein at and as
of such Closing Date as if made as of such date, as to the performance by the
Depositor of all of its obligations hereunder to be performed at or prior to
such Closing Date, and as to such other matters as the Representative may
reasonably request.
(l) The Servicer shall have furnished or caused to be
furnished to the Representative on the Closing Date a certificate of officers of
such Servicer in form and substance reasonably satisfactory to the
Representative.
(m) The Certificate Insurance Policy shall have been duly
executed and issued at or prior to the Closing Date and shall conform in all
material respects to the description thereof in the Prospectus Supplement.
(n) The Representative shall have received, on the Closing
Date, an opinion of counsel to MBIA Insurance Corporation ("the Certificate
Insurer"), dated the Closing Date, in form and substance satisfactory to the
Representative and counsel for the Underwriters and containing opinions
substantially to the effect set forth in Exhibit D hereto.
(o) On or prior to the Closing Date there shall not have
occurred any downgrading, nor shall any notice have been given of (i) any
intended or potential downgrading or (ii) any review or possible change in
rating the direction of which has not been indicated, in the rating accorded the
Certificate Insurer's claims paying ability by any "nationally recognized
statistical rating organization," as such term is defined for purposes of the
1933 Act.
(p) There has not occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise, or in
the earnings, business or operations, since September 30, 1995, of the
Certificate Insurer, that is in the Representative's judgment material and
adverse and that makes it in the Representative's judgment impracticable to
market the Offered Securities on the terms and in the manner contemplated in the
Prospectus.
(q) The Representative shall have received, on the Closing
Date, a certificate dated the Closing Date and signed by the President, a senior
vice president or a vice president or other authorized officer of the
Certificate Insurer to the effect that the signer of such certificate has
carefully examined the Certificate Insurance Policy, the Insurance Agreement
dated the Closing Date (the "Insurance Agreement") among the Servicer, the
Underwriter, the Depositor and the Certificate Insurer and the related documents
and that, to the best of his or her knowledge based on reasonable investigation:
1. There are no actions, suits or proceedings pending or threatened
against or affecting the Certificate Insurer which, if adversely determined,
individually or in the aggregate, would adversely affect the Certificate
Insurer's performance under the Certificate Insurance Policy or the Insurance
Agreement;
2. Each person who, as an officer or representative of the
Certificate Insurer, signed or signs the Certificate Insurance Policy, the
Insurance Agreement or any other document delivered pursuant hereto, on the date
thereof, or on the Closing Date, in connection with the transactions described
in this Agreement was, at the respective times of such signing and delivery, and
is now, duly elected or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing on such documents
are their genuine signatures;
3. The information contained in the Prospectus under the captions
"THE CERTIFICATE INSURANCE POLICY" and "THE CERTIFICATE INSURER" is true and
correct in all material respects and does not omit to state a material fact with
respect to the description of the Certificate Insurance Policies or the ability
of the Certificate Insurer to meet its payment obligations under the Certificate
Insurance Policies;
4. The tables regarding the Certificate Insurer's capitalization
set forth in the Prospectus under the heading "THE CERTIFICATE INSURANCE POLICY"
and THE CERTIFICATE INSURER" present fairly the capitalization of the
Certificate Insurer as of the dates and for such periods as are referenced in
such tables;
5. The execution and delivery of the Insurance Agreement and the
Policy and the compliance with the terms and provisions thereof will not
conflict with, result in a breach of, or constitute a default under any of the
terms, provisions or conditions or, the Restated Charter or By-Laws of the
Insurer, or any agreement, indenture or other instrument to which the Insurer is
a party;
6. The audited balance sheet of the Certificate Insurer as of
December 31, 1994 and the related statement of income and retained earnings for
the fiscal year then ended, and the accompanying footnotes, together with an
opinion thereon dated February 1, 1995 of Coopers & Lybrand, independent
certificated public accountants, copies of which are included in the Prospectus,
fairly present in all material respects the financial condition of the
Certificate Insurer as of such date and for the period covered by such
statements in accordance with generally accepted accounting principles
consistently applied;
7. To the best knowledge of such officer, since no material adverse
change has occurred in the financial position of the Certificate Insurer other
than as set forth in the Prospectus; and
8. The issuance of the Certificate Insurance Policy and the
execution, delivery and performance of the Insurance Agreement have been duly
authorized by all necessary corporate proceedings. No further approvals or
filings of any kind, including, without limitation, any further approvals of or
further filing with any governmental agency or other governmental authority, or
any approval of the Certificate Insurer's board of directors or stockholders,
are necessary for the Certificate Insurance Policy and the Insurance Agreement
to constitute the legal, valid and binding obligations of the Certificate
Insurer.
(r) The Representative shall have been furnished such
further information, certificates, documents and opinions as the Representative
may reasonably request.
SECTION 5. COVENANTS OF THE DEPOSITOR. In further
consideration of the agreements of the Underwriters contained in the
Underwriting Agreement, the Depositor covenants as follows:
(a) To furnish the Representative, without charge, copies of
the Registration Statement and any amendments thereto including exhibits and as
many copies of the Prospectus and any supplements and amendments thereto as the
Representative may from time to time reasonably request.
(b) Immediately following the execution of the Underwriting
Agreement, the Depositor will prepare a prospectus supplement setting forth the
principal amount, notional amount or stated amount, as applicable, of Offered
Securities covered thereby, the price at which the Offered Securities are to be
purchased by the Underwriters from the Depositor, either the initial public
offering price or prices or the method by which the price or prices at which the
Offered Securities are to be sold will be determined, the selling concessions
and reallowances, if any, any delayed delivery arrangements, and such other
information as the Representative and the Depositor deem appropriate in
connection with the offering of the Offered Securities, but the Depositor will
not file any amendment to the Registration Statement or any supplement to the
Prospectus of which the Representative shall not previously have been advised
and furnished with a copy a reasonable time prior to the proposed filing or to
which the Representative shall have reasonably objected. The Depositor will use
its best efforts to cause any amendment to the Registration Statement to become
effective as promptly as possible. During the time when a Prospectus is
required to be delivered under the 1933 Act, the Depositor will comply so far as
it is able with all requirements imposed upon it by the 1933 Act and the rules
and regulations thereunder to the extent necessary to permit the continuance of
sales or of dealings in the Offered Securities in accordance with the provisions
hereof and of the Prospectus, and the Depositor will prepare and file with the
Commission, promptly upon request by the Representative, any amendments to the
Registration Statement or supplements to the Prospectus which may be necessary
or advisable in connection with the distribution of the Offered Securities by
the Underwriters, and will use its best efforts to cause the same to become
effective as promptly as possible. The Depositor will advise the
Representative, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement or any amended Registration Statement
has become effective or any supplement to the Prospectus or any amended
Prospectus has been filed. The Depositor will advise the Representative,
promptly after it receives notice or obtains knowledge thereof, of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, or the suspension of the qualification
of the Offered Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceeding for any such purpose, or of any
request made by the Commission for the amending or supplementing of the
Registration Statement or the Prospectus or for additional information, and the
Depositor will use its best efforts to prevent the issuance of any such stop
order or any order suspending any such qualification, and if any such order is
issued, to obtain the lifting thereof as promptly as possible.
(c) If, at any time when a prospectus relating to the
Offered Securities is required to be delivered under the 1933 Act, any event
occurs as a result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact, or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, or
if it is necessary for any other reason to amend or supplement the Prospectus to
comply with the 1933 Act, to promptly notify the Representative thereof and upon
their request to prepare and file with the Commission, at the Depositor's own
expense, an amendment or supplement which will correct such statement or
omission or any amendment which will effect such compliance.
(d) During the period when a prospectus is required by law
to be delivered in connection with the sale of the Offered Securities pursuant
to the Underwriting Agreement, the Depositor will file, on a timely and complete
basis, all documents that are required to be filed by the Depositor with the
Commission pursuant to Sections 13, 14, or 15(d) of the 1934 Act.
(e) To qualify the Offered Securities for offer and sale
under the securities or "Blue Sky" laws of such jurisdictions as the
Representative shall reasonably request and to pay all expenses (including fees
and disbursements of counsel) in connection with such qualification of the
eligibility of the Offered Securities for investment under the laws of such
jurisdictions as the Representative may designate provided that in connection
therewith the Depositor shall not be required to qualify to do business or to
file a general consent to service of process in any jurisdiction.
(f) To make generally available to the Depositor's security
holders, as soon as practicable, but in any event not later than eighteen months
after the date on which the filing of the Prospectus, as amended or
supplemented, pursuant to Rule 424 under the 1933 Act first occurs, an earnings
statement of the Depositor covering a twelve-month period beginning after the
date of the Underwriting Agreement, which shall satisfy the provisions of
Section 11(a) of the 1933 Act and the applicable rules and regulations of the
Commission thereunder (including, at the option of the Depositor, Rule 158).
(g) For so long as any of the Offered Securities remain
outstanding, to furnish to the Representative upon request in writing copies of
such financial statements and other periodic and special reports as the
Depositor may from time to time distribute generally to its creditors or the
holders of the Offered Securities and to furnish to the Representative copies of
each annual or other report the Depositor shall be required to file with the
Commission.
(h) For so long as any of the Offered Securities remain
outstanding, the Depositor will, or will cause the Servicer to, furnish to the
Representative, as soon as available, a copy of (i) the annual statement of
compliance delivered by the Servicer to the Trustee under the applicable Pooling
and Servicing Agreement, (ii) the annual independent public accountants'
servicing report furnished to the Trustee pursuant to the applicable Pooling and
Servicing Agreement, (iii) each report regarding the Offered Securities mailed
to the holders of such Securities, and (iv) from time to time, such other
information concerning such Securities as the Representative may reasonably
request.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor represents and warrants to, and agrees with, each Underwriter, as
of the date of the Underwriting Agreement, as follows:
(a) The Registration Statement including a prospectus
relating to the Securities and the offering thereof from time to time in
accordance with Rule 415 under the 1933 Act has been filed with the Commission
and such Registration Statement, as amended to the date of the Underwriting
Agreement, has become effective. No stop order suspending the effectiveness of
such Registration Statement has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission. A prospectus supplement
specifically relating to the Offered Securities will be filed with the
Commission pursuant to Rule 424 under the 1933 Act; provided, however, that a
supplement to the Prospectus prepared pursuant to Section 5(b) hereof shall be
deemed to have supplemented the Basic Prospectus only with respect to the
Offered Securities to which it relates. The conditions to the use of a
registration statement on Form S-3 under the 1933 Act, as set forth in the
General Instructions on Form S-3, and the conditions of Rule 415 under the 1933
Act, have been satisfied with respect to the Depositor and the Registration
Statement. There are no contracts or documents of the Depositor that are
required to be filed as exhibits to the Registration Statement pursuant to the
1933 Act or the rules and regulations thereunder that have not been so filed.
(b) On the effective date of the Registration Statement, the
Registration Statement and the Basic Prospectus conformed in all material
respects to the requirements of the 1933 Act and the rules and regulations
thereunder, and did not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading; on the date of the Underwriting Agreement
and as of the Closing Date, the Registration Statement and the Prospectus
conform, and as amended or supplemented, if applicable, will conform in all
material respects to the requirements of the 1933 Act and the rules and
regulations thereunder, and on the date of the Underwriting Agreement and as of
the Closing Date, neither of such documents includes any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and neither of such
documents as amended or supplemented, if applicable, will include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that the foregoing does not apply to statements or omissions
in any of such documents based upon written information furnished to the
Depositor by any Underwriter specifically for use therein.
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, there has been no material adverse change in the condition,
financial or otherwise, earnings, affairs, regulatory situation or business
prospects of the Depositor, whether or not arising in the ordinary course of the
business of the Depositor.
(d) The Depositor has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.
(e) The Depositor has all requisite power and authority
(corporate and other) and all requisite authorizations, approvals, order,
licenses, certificates and permits of and from all government or regulatory
officials and bodies to own its properties, to conduct its business as described
in the Registration Statement and the Prospectus and to execute, deliver and
perform this Agreement, the Underwriting Agreement, the Pooling and Servicing
Agreement and, if applicable, the Custodial Agreement, except such as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution by the Underwriter of the Offered Securities; all such
authorizations, approvals, orders, licenses, certificates are in full force and
effect and contain no unduly burdensome provisions; and, except as set forth or
contemplated in the Registration Statement or the Prospectus, there are no legal
or governmental proceedings pending or, to the best knowledge of the Depositor,
threatened that would result in a material modification, suspension or
revocation thereof.
(f) The Offered Securities have been duly authorized, and
when the Offered Securities are issued and delivered pursuant to the
Underwriting Agreement, the Offered Securities will have been duly executed,
issued and delivered and will be entitled to the benefits provided by the
applicable Pooling and Servicing Agreement, subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting the rights of creditors generally, and to general
principles of equity (regardless of whether the entitlement to such benefits is
considered in a proceeding in equity or at law), and will conform in substance
to the description thereof contained in the Registration Statement and the
Prospectus, and will in all material respects be in the form contemplated by the
Pooling and Servicing Agreement.
(g) The execution and delivery by the Depositor of this
Agreement, the Underwriting Agreement and the Pooling and Servicing Agreement
are within the corporate power of the Depositor and neither the execution and
delivery by the Depositor of this Agreement, the Underwriting Agreement and the
Pooling and Servicing Agreement nor the consummation by the Depositor of the
transactions therein contemplated, nor the compliance by the Depositor with the
provisions thereof, will conflict with or result in a breach of, or constitute a
default under, the charter or the by-laws of the Depositor or any of the
provisions of any law, governmental rule, regulation, judgment, decree or order
binding on the Depositor or its properties, or any of the provisions of any
indenture, mortgage, contract or other instrument to which the Depositor is a
party or by which it is bound, or will result in the creation or imposition of a
lien, charge or encumbrance upon any of its property pursuant to the terms of
any such indenture, mortgage, contract or other instrument, except such as have
been obtained under the 1933 Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Offered
Securities by the Underwriters.
(h) The Underwriting Agreement has been, and as of the
Closing Date the Pooling and Servicing Agreement will have been, duly
authorized, executed and delivered by the Depositor.
(i) As of the Closing Date, each of the Underwriting
Agreement and the Pooling and Servicing Agreement will constitute a legal, valid
and binding obligation of the Depositor, enforceable against the Depositor, in
accordance with its terms, subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium and other laws
affecting the rights of creditors generally, and to general principles of equity
and the discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law).
(j) No filing or registration with, notice to, or consent,
approval, non-disapproval, authorization or order or other action of, any court
or governmental authority or agency is required for the consummation by the
Depositor of the transactions contemplated by the Underwriting Agreement or the
Pooling and Servicing Agreement, except such as have been obtained and except
such as may be required under the 1933 Act, the rules and regulations
thereunder, or state securities or "Blue Sky" laws, in connection with the
purchase and distribution of the Offered Securities by the Underwriters.
(k) The Depositor owns or possesses or has obtained all
material governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to lease, own or license, as the case may be, and to
operate, its properties and to carry on its business as presently conducted and
has received no notice of proceedings relating to the revocation of any such
license, permit, consent, order or approval, which singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would materially
adversely affect the conduct of the business, results of operations, net worth
or condition (financial or otherwise) of the Depositor.
(l) Other than as set forth or contemplated in the
Prospectus, there are no legal or governmental proceedings pending to which the
Depositor is a party or of which any property of the Depositor is the subject
which, if determined adversely to the Depositor would individually or in the
aggregate have a material adverse effect on the condition (financial or
otherwise), earnings, affairs, or business or business prospects of the
Depositor and, to the best of the Depositor's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.
(m) Each of the Offered Securities will, when issued, be a
"mortgage related security" as such term is defined in Section 3(a)(41) of the
1934 Act.
(n) At the Closing Date or any date on which Additional
Mortgage Loans are transferred by the Depositor to the Trust (each, a
"Subsequent Transfer Date"), as the case may be, each of the Mortgage Loans
which is a subject of the Pooling and Servicing Agreement and all such Mortgage
Loans in the aggregate will meet the criteria for selection described in the
Prospectus, and at the Closing Date or any Subsequent Transfer Date, as the case
may be, the representations and warranties made by the Depositor in such Pooling
and Servicing Agreement will be true and correct as of such date.
(o) At the time of execution and delivery of the Pooling and
Servicing Agreement and on any Subsequent Transfer Date, as the case may be, the
Depositor will have good and marketable title to the Mortgage Loans being
transferred to the Trustee pursuant to the Pooling and Servicing Agreement, free
and clear of any lien, mortgage, pledge, charge, encumbrance, adverse claim or
other security interest (collectively, "Liens"), and will not have assigned to
any person any of its right, title or interest in such Mortgage Loans or in such
Pooling and Servicing Agreement or the Offered Securities being issued pursuant
thereto, the Depositor will have the power and authority to transfer such
Mortgage Loans to the Trustee and to transfer the Offered Securities to each of
the Underwriters, and upon execution and delivery to the Trustee of the Pooling
and Servicing Agreement and delivery to each of the Underwriters of the Offered
Securities, and on any Subsequent Transfer Date, as the case may be, the Trustee
will have good and marketable title to the Mortgage Loans and each of the
Underwriters will have good and marketable title to the Offered Securities, in
each case free and clear of any Liens. Notwithstanding the foregoing, each of
the Underwriters and the Depositor agrees and understands that, in accordance
with and pursuant to the Pooling and Servicing Agreement, payments collected in
respect of the Mortgage Loans allocable to the Additional Balances on the
Mortgage Loans will not be available to the holders of the Offered Securities.
(p) The Pooling and Servicing Agreement is not required to
be qualified under the Trust Indenture Act of 1939, as amended, and the Trust
Fund (as defined in the Pooling and Servicing Agreement) is not required to be
registered under the Investment Company Act of 1940, as amended.
(q) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of the Underwriting
Agreement, this Agreement, the Pooling and Servicing Agreement and the Offered
Securities have been or will be paid at or prior to the Closing Date.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Depositor agrees to indemnify and hold harmless each
Underwriter (including Prudential Securities Incorporated acting in its capacity
as Representative and as one of the Underwriters), and each person, if any, who
controls any Underwriter within the meaning of the 1933 Act, against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter or
such controlling person may become subject under the 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter and each
such controlling person for any legal or other expenses reasonably incurred by
such Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Depositor will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with (1)
written information furnished to the Depositor by any Underwriter through the
Representative specifically for use therein or (2) information regarding the
Mortgage Loans except to the extent that the Depositor has been indemnified by
the Seller, under the Purchase and Sale Agreement, or the Servicer, under the
Pooling and Servicing Agreement. This indemnity agreement will be in addition to
any liability which the Depositor may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the
Depositor, each of the Depositor's directors, each of the Depositor's officers
who signed the Registration Statement and each person, if any, who controls the
Depositor, within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities to which the Depositor, or any such director, officer or
controlling person may become subject, under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or any other
prospectus relating to the Offered Securities, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent that such untrue statements or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Depositor by
any Underwriter through the Representative specifically for use therein; and
each Underwriter will reimburse any legal or other expenses reasonably incurred
by the Depositor or any such director, officer or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have. The Depositor acknowledges
that the statements set forth under the caption "Plan of Distribution" in the
Prospectus Supplement constitute the only information furnished to the Depositor
by or on behalf of any Underwriter for use in the Registration Statement, any
Preliminary Prospectus or the Prospectus, and each of the several Underwriters
represents and warrants that such statements are correct as to it.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 7, notify the indemnifying party of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent such indemnifying party
has been prejudiced thereby. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof with counsel satisfactory to such
indemnified party. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section 7 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that the Representative shall have the right to employ separate counsel
to represent the Representative, those other Underwriters and their respective
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Underwriters against the
Depositor under this Section 7 if, in the reasonable judgment of the
Representative, it is advisable for the Representative and those Underwriters
and controlling persons to be represented by separate counsel, and in that event
the fees and expenses of such separate counsel shall be paid by the Depositor
(it being understood, however, that the Depositor shall not, in connection with
any one such claim or separate but substantially similar or related claim in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for the Representative and those Underwriters and
controlling persons).
(d) In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 7 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such losses, claims, damages or liabilities (or actions in respect thereof);
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective parties are
entitled, there shall be considered the relative benefits received by the
Depositor on the one hand, and the Underwriters on the other, from the offering
of the Offered Securities (taking into account the portion of the proceeds of
the offering realized by each), the Depositor's and the Underwriters' relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate in the
circumstances. The Depositor and the Underwriters agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation (even if the Underwriters were treated as one entity for such
purpose). No Underwriter or person controlling such Underwriter shall be
obligated to make contribution hereunder which in the aggregate exceeds the
total public offering price of the Offered Securities purchased by such
Underwriter under the Underwriting Agreement, less the aggregate amount of any
damages which such Underwriter and its controlling persons have otherwise been
required to pay in respect of the same or any substantially similar claim. The
Underwriters' obligation to contribute hereunder are several in proportion to
their respective underwriting obligations and not joint. For purposes of this
Section 7, each person, if any, who controls an Underwriter within the meaning
of Section 15 of the 1933 Act shall have the same rights to contribution as such
Underwriter, and each director of the Depositor, each officer of the Depositor
who signed the Registration Statement, and each person, if any, who controls the
Depositor within the meaning of Section 15 of the 1933 Act, shall have the same
rights to contribution as the Depositor.
(e) The parties hereto agree that the first sentence of
Section 5 of the Indemnification Agreement (the "Indemnification Agreement")
dated as of the Closing Date among the Certificate Insurer, the Servicer, the
Depositor and the Underwriter shall not be construed as limiting the Depositor's
right to enforce its rights under Section 7 of this Agreement. The parties
further agree that, as between the parties hereto, to the extent that the
provisions of Section 4, 5 and 6 of the Indemnification Agreement conflict with
Section 7 hereof, the provisions of Section 7 hereof shall govern.
SECTION 8. SURVIVAL OF CERTAIN REPRESENTATIONS AND
OBLIGATIONS. The respective representations, warranties, agreements, covenants,
indemnities and other statements of the Depositor, its officers and the several
Underwriters set forth in, or made pursuant to, the Underwriting Agreement shall
remain in full force and effect, regardless of any investigation, or statement
as to the result thereof, made by or on behalf of any Underwriter, the
Depositor, or any of the officers or directors or any controlling person of any
of the foregoing, and shall survive the delivery of and payment for the Offered
Securities.
SECTION 9. TERMINATION.
(a) The Underwriting Agreement may be terminated by the
Depositor by notice to the Representative in the event that a stop order
suspending the effectiveness of the Registration Statement shall have been
issued or proceedings for that purpose shall have been instituted or threatened.
(b) The Underwriting Agreement may be terminated by the
Representative by notice to the Depositor in the event that the Depositor shall
have failed, refused or been unable to perform all obligations and satisfy all
conditions to be performed or satisfied hereunder by the Depositor at or prior
to the Closing Date.
(c) Termination of the Underwriting Agreement pursuant to
this Section 9 shall be without liability of any party to any other party other
than as provided in Sections 7 and 11 hereof.
SECTION 10. DEFAULT OF UNDERWRITERS. If any Underwriter or
Underwriters defaults or default in their obligation to purchase Offered
Securities which it or they have agreed to purchase under the Underwriting
Agreement and the aggregate principal amount of the Offered Securities which
such defaulting Underwriter or Underwriters agreed but failed to purchase is ten
percent or less of the aggregate principal amount, notional amount or stated
amount, as applicable, of the Offered Securities to be sold under the
Underwriting Agreement, as the case may be, the other Underwriters shall be
obligated severally in proportion to their respective commitments under the
Underwriting Agreement to purchase the Offered Securities which such defaulting
Underwriter or Underwriters agreed but failed to purchase. If any Underwriter
or Underwriters so defaults or default and the aggregate principal amount of the
Offered Securities with respect to which such default or defaults occurs or
occur is more than ten percent of the aggregate principal amount, notional
amount or stated amount, as applicable, of Offered Securities to be sold under
the Underwriting agreement, as the case may be, and arrangements satisfactory to
the Representative and the Depositor for the purchase of such Offered Securities
by other persons (who may include one or more of the non-defaulting Underwriters
including the Representative) are not made within 36 hours after any such
default, the Underwriting Agreement will terminate without liability on the part
of any non-defaulting Underwriters or the Depositor except for the expenses to
be paid or reimbursed by the Depositor pursuant to Section 11 hereof. As used
in the Underwriting Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10. Nothing herein shall
relieve a defaulting Underwriter from liability for its default.
SECTION 11. EXPENSES. The Depositor agrees with the several
Underwriters that:
(a) whether or not the transactions contemplated in the
Underwriting Agreement are consummated or the Underwriting Agreement is
terminated, the Depositor will pay all fees and expenses incident to the
performance of its obligations under the Underwriting Agreement, including, but
not limited to, (i) the Commission's registration fee, (ii) the expenses of
printing and distributing the Underwriting Agreement and any related
underwriting documents, the Registration Statement, any Preliminary Prospectus,
the Prospectus, any amendments or supplements to the Registration Statement or
the Prospectus, and any Blue Sky memorandum or legal investment survey and any
supplements thereto, (iii) fees and expenses of rating agencies, accountants and
counsel for the Depositor, (iv) the expenses referred to in Section 5(e) hereof,
and (v) all miscellaneous expenses referred to in Item 30 of the Registration
Statement;
(b) all out-of-pocket expenses, including counsel fees,
disbursements and expenses, reasonably incurred by the Underwriters in
connection with investigating, preparing to market and marketing the Offered
Securities and proposing to purchase and purchasing the Offered Securities under
the Underwriting Agreement will be borne and paid by the Depositor if the
Underwriting Agreement is terminated by the Depositor pursuant to Section 9(a)
hereof or by the Representative on account of the failure, refusal or inability
on the part of the Depositor to perform all obligations and satisfy all
conditions on the part of the Depositor to be performed or satisfied hereunder;
and
(c) the Depositor will pay the cost of preparing the
certificates for the Offered Securities.
Except as otherwise provided in this Section 11, the
Underwriters agree to pay all of their expenses in connection with
investigating, preparing to market and marketing the Offered Securities and
proposing to purchase and purchasing the Offered Securities under the
Underwriting Agreement, including the fees and expenses of their counsel and any
advertising expenses incurred by them in making offers and sales of the Offered
Securities.
SECTION 12. NOTICES. All communications under the Underwriting
Agreement shall be in writing and, if sent to the Underwriters, shall be mailed,
delivered or telegraphed and confirmed to the Representative at the address and
to the attention of the person specified in the Underwriting Agreement, and, if
sent to the Depositor, shall be mailed, delivered or telegraphed and confirmed
to Prudential Securities Secured Financing Corporation, 199 Water Street, 26th
Floor, New York, New York 10292, Attention: Director-Mortgage Finance Group;
provided, however, that any notice to any Underwriter pursuant to the
Underwriting Agreement shall be mailed, delivered or telegraphed and confirmed
to such Underwriter at the address furnished by it.
SECTION 13. REPRESENTATIVE OF UNDERWRITERS. Any Representative
identified in the Underwriting Agreement will act for the Underwriters of the
Offered Securities and any action taken by the Representative under the
Underwriting Agreement will be binding upon all of such Underwriters.
SECTION 14. SUCCESSORS. The Underwriting Agreement shall inure
to the benefit of and shall be binding upon the several Underwriters and the
Depositor and their respective successors and legal representatives, and nothing
expressed or mentioned herein or in the Underwriting Agreement is intended or
shall be construed to give any other person any legal or equitable right, remedy
or claim under or in respect of the Underwriting Agreement, or any provisions
herein contained, the Underwriting Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the
representations and warranties of the Depositor contained herein or in the
Underwriting Agreement shall also be for the benefit of any person or persons
who controls or control any Underwriter within the meaning of Section 15 of the
1933 Act, and (ii) the indemnities by the several Underwriters shall also be for
the benefit of the directors of the Depositor, the officers of the Depositor who
have signed the Registration Statement and any person or persons who control the
Depositor within the meaning of Section 15 of the 1933 Act. No purchaser of the
Offered Securities from any Underwriter shall be deemed a successor because of
such purchase. This Agreement and each Underwriting Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
SECTION 15. TIME OF THE ESSENCE. Time shall be of the essence
of each Underwriting Agreement.
SECTION 16. GOVERNING LAW. This Agreement and each Underwriting
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
If the foregoing is in accordance with your understanding, please sign
and return two counterparts hereof.
Very truly yours,
PRUDENTIAL SECURITIES
SECURED FINANCING CORPORATION
By: /s/ JOHN HEEGER
--------------------------
John Heeger
Vice President
Accepted as of the date hereof:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ JOHN HEEGER
------------------------
Name: John Heeger
Title: Managing Director
POOLING AND SERVICING AGREEMENT
Dated as of December 6, 1995
by and among
Prudential Securities Secured Financing Corporation
(Depositor)
and
Irwin Home Equity Corporation
(Servicer)
and
The Chase Manhattan Bank, N.A.
(Trustee)
Prudential Securities Secured Financing Corporation Trust 1995-2
Mortgage Loan Certificates,
Series 1995-2
Class A and Class R and the Exchangeable Certificate
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
Section 1.1 Certain Defined Terms .................................. 1
Section 1.2 Provisions of General Application ...................... 30
ARTICLE II
Establishment of the Trust Sale
and Conveyance of the Trust Fund
Section 2.1 Sale and Conveyance of Trust Fund; Priority and Subordination
of Ownersbip Interests; Establishment of the Trust ...... 31
Section 2.2 Possession of Mortgage Files; Access to Mortgage Files .. 31
Section 2.3 Delivery of Mortgage Loan Documents ..................... 32
Section 2.4 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee ................. 35
Section 2.5 Designations under REMIC Provisions; Designation of Startup
Day ..................................................... 37
Section 2.6 Execution of Certificates ............................... 37
Section 2.7 Application of Principal and Interest ................... 37
Section 2.8 Grant of Security Interest .............................. 37
Section 2.9 Further Assurances; Power of Aflomey .................... 38
ARTICLE III
Representations and Warranties
Section 3.1 Representations of the Servicer ......................... 39
Section 3.2 Representations, Warranties and Covenants of the Depositor 40
Section 3.3 Purchase and Substitution ............................... 42
Section 3.4 Servicer Covenants ..................................... 43
ARTICLE IV
The Certificates
Section 4.1 The Certificates ........................................ 45
Section 4.2 Registration of Transfer and Exchange of Certificates ... 45
Section 4.3 Mutilated, Destroyed, Lost or Stolen Certificates ....... 52
Section 4.4 Persons Deemed Owners ................................... 52
i
Page
ARTICLE V
Administration and Servicing of the Mortgage Loans
Section 5.1 Appointment of the Servicer .............................. 53
Section 5.2 Subservicing Agreements Between the Servicer and Subservicers 55
Section 5.3 Collection of Certain Mortgage Loan Payments; Collection
Account .................................................. 56
Section 5.4 Permitted Withdrawals from the Collection Account ........ 58
Section 5.5 Payment of Taxes, Insurance and Other Charges ............ 60
Section 5.6 Maintenance of Casualty Insurance ........................ 60
Section 5.7 Servicer Account ......................................... 61
Section 5.8 Fidelity Bond; Errors and Omissions Policy ............... 62
Section 5.9 Collection of Taxes, Assessments and Other Items ......... 62
Section 5.10 Periodic Filings with the Securities and Exchange Commission;
Additional Information ................................... 63
Section 5.11 Enforcement of Due-on-Sale Clauses; Assumption Agreements 63
Section 5.12 Realization upon Defaulted Mortgage Loans ................ 64
Section 5.13 Trustee to Cooperate; Release of Mortgage Files .......... 66
Section 5.14 Servicing Fee; Servicing Compensation .................... 67
Section 5.15 Reports to the Trustee; Collection Account Statements .... 67
Section 5.16 Annual Statement as to Compliance ........................ 68
Section 5.17 Annual Independent Public Accountants' Servicing Report .. 68
Section 5.18 [Reserved]................................................ 68
Section 5.19 Reports to be Provided by the Servicer ................... 68
Section 5.20 Adjustment of Servicing Compensation in Respect of Prepaid
Mortgage Loans............................................ 69
Section 5.21 Periodic Advances ......................................... 69
Section 5.22 Indemnification; Third Party Claims ....................... 70
Section 5.23 Maintenance of Corporate Existence and Licenses; Merger or
Consolidation of the Servicer.............................. 71
Section 5.24 Assignment of Agreement by Servicer; Servicer Not to Resign 71
ARTICLE VI
Distributions and Payments
Section 6.1 Establishment of Certificate Account and Exchangeable
Certificate Account; Deposits to the Certificate
Account and Exchangeable Certificate Account ............ 72
Section 6.2 Permitted Withdrawals From the Certificate Account and the
Exchangeable Certificate Account......................... 73
Section 6.3 Collection of Money ..................................... 74
Section 6.4 The Reserve Account and the Certificate Insurance Policy 74
Section 6.5 Distributions ........................................... 76
Section 6.6 Investment of Accounts .................................. 78
ii
Page
Section 6.7 Reports by Trustee........................................ 79
Section 6.8 Additional Reports by Trustee and by Servicer ............ 81
Section 6.9 Compensating Interest .................................... 82
Section 6.10 Effect of Payments by the Certificate Insurer; Subrogation 82
Section 6.11 Exchanges; Tender of Exchangeable Certificate ............ 82
ARTICLE VII
Default
Section 7.1 Events of Default ........................................ 86
Section 7.2 Trustee to Act; Appointment of Successor ................. 87
Section 7.3 Waiver of Defaults ....................................... 89
Section 7.4 Mortgage Loans, Trust Fund and Accounts Held for Benefit of the
Certificate Insurer ...................................... 89
ARTICLE VIII
Termination
Section 8.1 Termination .............................................. 91
Section 8.2 Additional Termination Requirements ...................... 92
Section 8.3 Accounting Upon Termination of Servicer .................. 93
ARTICLE IX
The Trustee
Section 9.1 Duties of Trustee ........................................ 94
Section 9.2 Certain Matters Affecting the Trustee .................... 99
Section 9.3 Trustee Not Liable for Certificates or Mortgage Loans .... 100
Section 9.4 Trustee May Own Certificates ............................. 100
Section 9.5 Trustee's Fees and Expenses; Indemnity ................... 100
Section 9.6 Eligibility Requirements for Trustee ..................... 101
Section 9.7 Resignation and Removal of the Trustee ................... 101
Section 9.8 Successor Trustee ........................................ 102
Section 9.9 Merger or Consolidation of Trustee ....................... 103
Section 9.10 Appointment of Co-Trustee or Separate Trustee ............ 103
Section 9.11 Tax Returns OlD Interest Reporting ....................... 104
Section 9.12 Retirement of Certificates ............................... 104
iii
ARTICLE X
Miscellaneous Provisions
Section 10.1 Limitation on Liability of the Depositor and the Servicer 105
Section 10.2 Acts of Certificateholders; Certificateholders' Rights .. 105
Section 10.3 Amendment ............................................... 106
Section 10.4 Recordation of Agreement ............................... 107
Section 10.5 Duration of Agreement .................................. 107
Section 10.6 Notices ................................................ 107
Section 10.7 Severability of Provisions .............................. 107
Section 10.8 No Partnership .......................................... 108
Section 10.9 Counterparts ........................................... 108
Section 10.10 Successors and Assigns .................................. 108
Section 10.11 Headings ............................................... 108
Section 10.12 The Certificate Insurer Default ........................ 108
Section 10.13 Third Party Beneficiary ................................. 108
Section 10.14 Intent of the Parties ................................... 108
Section 10.15 Appointment of Tax Matters Person ....................... 108
Section 10.16 GOVERNING LAW; CONSENT TO JURISDICTION; WMVER
OF JURY TRIAL ........................................... 109
iv
EXHIBITS
EXHIBIT A Certificate Insurance Policy
EXHIBIT B-1 Form of Class A Certificate
EXHIBIT B-2 Form of Class R Certificate
EXHIBIT B-3 Form of Exchangeable Certificate
EXHIBIT C Mortgage File
EXHIBIT D Mortgage Loan Schedule
EXHIBIT E Trustee's cIa'owledgement of Receipt of files
EXHIBIT F Initial Certification of Trustee
EXHIBIT G Final Certification of Trustee
EXHIBIT H Request for Release of Documents
EXHIBIT I Transfer Affidavit and Agreement
EXHIBIT J Transferor's Certificate
EXHIBIT K ERISA Investment Representation Letters
EXHIBIT L Delinquency Collection Policies and Procedures
EXHIBIT M Certificate Re: Prepaid Loans
EXHIBIT N Representation Letter
v
This Pooling and Servicing Agreement, relating to Prudential Securities Secured
Financing Corporation Trust 1995-2, dated as of December 6, 1995, by and among
Prudential Securities Secured Financing Corporation, a Delaware corporation, in
its capacity as depositor of the Trust (the "Depositor"), Irwin Home Equity
Corporation, an Indiana corporation, in its capacity as servicer (the
"Servicer"), and The Chase Manhattan Bank, N.A., a national banking association,
in its capacity as trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Depositor wishes to establish a trust which
provides for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the trust estate;
WHEREAS, the Depositor also wishes to provide for the issuance
from time to time of new Series of Certificates (the "Additional Certificates")
representing interests in Additional Balances and/or Additional Mortgage Loans
(each as herein defined), the rights with respect to which will be determined
pursuant to a supplement to this Agreement (the "Supplement");
WHEREAS, the Servicer has agreed to service the Mortgage Loans,
which constitute the principal assets of the trust estate;
WHEREAS, The Chase Manhattan Bank, N.A. is willing to serve in
the capacity of Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation (the "Certificate Insurer")
is intended to be a third-party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Servicer and the Trustee hereby
agree as follows:
ARTICLE I
Definitions
Section 1.1 Certain Defined Terms. Whenever used herein and
except as otherwise amended in any Supplement hereto, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings.
"Accepted Servicing Practices" shall mean the Servicer's normal
servicing practices in servicing and administering mortgage loans for its own
account, which in general will conform to the mortgage servicing practices of
prudent mortgage lending institutions which service for their own account
mortgage loans of the same type as the Mortgage Loans in the jurisdictions in
which the related Mortgaged Properties are located and will give due
consideration to the Certificate Insurer's and the Certificateholders' reliance
on the Servicer; provided further that with respect to any Mortgage Loan for
which the related Monthly Payment has not been received by the related Due Date,
Accepted Servicing Practices shall also include the policies and procedures set
forth in the Delinquency Collection Policies and Procedures.
"Account" shall mean any Eligible Account established hereunder.
"Accrual Period" shall mean with respect to any Remittance Date
other than the first Remittance Date, the period commencing on the 15th day of
the month immediately preceding the month in which such Remittance Date occurs
and ending on the 14th day of the month in which such Remittance Date occurs.
The Accrual Period for the first Remittance Date shall commence on the Closing
Date and end on the day immediately preceding the first Remittance Date.
"Additional Balance" shall mean any amounts added, from time to
time, to the principal balance of a Mortgage Loan after the Cut-Off Date as a
result of the Mortgagor on the related Mortgage Note exercising the right to
borrow additional amounts under such Mortgage Loan. The Additional Balances
shall not be part of the REMIC 1995-2.
"Additional Certificates" shall mean any new Series of
certificates issued hereunder and governed by this Agreement, or related
Supplement, as modified, supplemented or amended from time to time in accordance
herewith representing an interest in the Additional Balances or in any
Additional Mortgage Loans.
"Additional Certificateholders" shall include any Holder of an
Additional Certificate.
"Additional Mortgage Loans" shall mean each mortgage loan
transferred to the Trust after the Closing Date pursuant to an exchange in
accordance with Section 6.11 hereof and with any applicable Supplement, the
interest in which may be represented by an Additional Certificate and/or the
Exchangeable Certificate.
"Administrative Costs" shall mean with respect to any Remittance
Date, the sum of the Trustee Fee, the Certificate Insurance Policy Premium
Amount and the Servicing Fee for such Remittance Date.
"Adverse REMIC Event" shall have the meaning assigned in Section
4.2(j).
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with such specified 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 or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agreement" shall mean this Pooling and Servicing Agreement,
including the Exhibits hereto, as amended or supplemented from time to time.
"Aggregate Trust Balance" shall mean the aggregated sum of the
Trust Balances of each of the Mortgage Loans as of any date of determination.
"Appraised Value" shall mean the appraised value of any
Mortgaged Property, equal to the value of the related Mortgaged Property based
upon the appraisal made at the time the Mortgage Loan is originated.
"Assignment of Mortgage" shall mean, with respect to each
Mortgage Loan, an assignment of the Mortgage, notice of transfer or equivalent
instrument sufficient under the laws of the jurisdiction wherein the related
Mortgaged Property is located to reflect of record the sale of the Mortgage to
the Trustee for the benefit of the Certificateholders and the holder of the
Exchangeable Certificate and any Additional Certificateholders.
"Authorized Denominations" shall mean, in the case of the Class
A Certificates, each of the Class A Certificates is issuable only in a minimum
denomination of $1,000 or integral multiples of $1,000 in excess thereof;
provided, however, that one Class A Certificate is issuable in a denomination
equal to an amount less than $1,000 such that the aggregate denomination of all
Class A Certificates shall be equal to the applicable Original Class A Principal
Balance and, in the case of Additional Certificates, in the denomination
authorized pursuant to any applicable Supplement.
"Available Amount" shall have the meaning described in Section
6.4(b).
"Available Funds Excess" shall have the meaning ascribed thereto
in Section 6.5
"Business Day" shall mean any day other than (a) a Saturday or
Sunday, or (b) a day on which banking institutions in the States of California
or New York are authorized or obligated by law or executive order to be closed.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980.
"Certificate" shall mean any Series 1995-2 Class A Certificate
or Series 1995-2 Class R Certificate executed by the Trustee on behalf of the
Trust Fund and authenticated by the Trustee.
"Certificate Account" shall mean the Certificate Account
established in accordance with Section 6.1(a) hereof and maintained by the
Trustee.
"Certificate Insurance Agreement" shall mean that certain
agreement between the Certificate Insurer, the Depositor and the parties named
therein.
"Certificateholder" shall mean, except as provided in Article X,
each Person in whose name a Certificate is registered in the Certificate
Register, except that, solely for the purposes of giving any consent (except any
consent required to be obtained pursuant to Section 10.2), waiver, request or
demand pursuant to this Agreement, any Certificate registered in the name of the
Servicer or any Subservicer or the Seller, or any Affiliate of any of them,
shall be deemed not to be outstanding and the undivided interest in the related
REMIC evidenced thereby shall not be taken into account in determining whether
the requisite percentage of Certificates necessary to effect any such consent,
waiver, request or demand has been obtained. For purposes of any consent,
waiver, request or demand of Certificateholders pursuant to this Agreement, upon
the Trustee's request, the Servicer and the Seller shall provide to the Trustee
a notice identifying any of their respective Affiliates or the Affiliates of any
Subservicer that is a Certificateholder as of the date(s) specified by the
Trustee in such request. Any Certificates on which payments are made under the
Certificate Insurance Policy shall be deemed to be outstanding and held by the
Certificate Insurer to the extent of such payment.
"Certificate Insurance Policy" shall mean the certificate
guaranty insurance policy No. 19988, and all endorsements thereto dated the
Closing Date, issued by the Certificate Insurer for the benefit of the
Certificateholders, a copy of which is attached hereto as Exhibit A. The
Certificate Insurance Policy shall not benefit any Additional Certificate or the
Exchangeable Certificate.
"Certificate Insurance Policy Premium Amount" shall mean, the
product of the Premium Percentage and the Class A Principal Balance for the
related Remittance Date.
"Certificate Insurer" shall be MBIA Insurance Corporation, a
stock insurance company organized and created under the laws of the State of New
York, and any successors thereto.
"Certificate Insurer Default" shall mean the failure, and
continuance of such failure, by the Certificate Insurer to make a payment
required under the Certificate Insurance Policy in accordance with its terms.
"Certificate Register" shall have the meaning described in
Section 4.2(a).
"Civil Relief Act" shall mean the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended.
"Class" shall mean any designated Class of Certificates of this
Series or of any new Series issued hereunder.
"Class A Certificate" shall mean any Certificate designated as a
"Class A Certificate" on the face thereof, in the form of Exhibit B-1 hereto,
and authenticated by the Trustee in accordance with the procedures set forth
herein.
"Class A Certificateholder" shall mean a Holder of a Class A
Certificate.
"Class A Distribution Amount" shall mean, with respect to the
Class A Certificates for any Remittance Date, the amount distributed to the
Holders of the Class A Certificates on such Remittance Date pursuant to Sections
6.5(a)(iii) and (iv) hereof, which amount shall be the lesser of (a) the Class A
Formula Distribution Amount for such Remittance Date and (b) the amount
(including any applicable portion of any Insured Payment) available for
distribution on account of the Class A Certificates for such Remittance Date.
"Class A Final Scheduled Maturity Date" shall mean the October
15, 2016 Remittance Date.
"Class A Formula Distribution Amount" shall mean, with respect
to the Class A Certificates for any Remittance Date, the sum of (a) the Class A
Interest Distribution Amount for such Remittance Date plus (b) the amount
described in clause (b) of the definition of Class A Principal Distribution
Amount for such Remittance Date plus (c) any Class A Formula Distribution Amount
remaining unpaid from any prior Remittance Date.
"Class A Insured Distribution Amount" shall mean, for any
Remittance Date, the excess of the Class A Formula Distribution Amount over the
Available Amount for such Remittance Date.
"Class A Interest Distribution Amount" shall mean, with respect
to the Class A Certificates for any Remittance Date an amount equal to the
aggregate of interest accrued at the Class A Pass-Through Rate during the
Accrual Period excluding (i) any Mortgage Loan Interest Shortfall and (ii) any
reductions in interest resulting from the application of the Civil Relief Act,
in each case as of such Remittance Date.
"Class A Pass-Through Rate" with respect to any Remittance Date,
will be equal to a per annum rate (calculated on the basis of actual days
elapsed divided by 360) equal to the lesser of (a) the sum of (i) LIBOR on the
Interest Determination Date (or as of December 1, 1995, in the case of the first
Remittance Date) plus (ii) for each Remittance Date which occurs on or prior to
the date on which the aggregate Class A Principal Balance of the Mortgage Loans
is less than 10% of the Principal Balance of the Mortgage Loans as of the Cut-
Off Date, 0.33% and for each Remittance Date occurring thereafter, 0.66% and (b)
the Weighted Average Rate Cap.
"Class A Principal Balance" shall mean, as of any time of
determination, the Original Class A Principal Balance less any amounts
distributed with respect to principal thereon on all prior Remittance Dates.
"Class A Principal Distribution Amount" shall mean, with respect
to the Class A Certificates for any Remittance Date, the lesser of:
(a) the excess of (i) the sum, as of such Remittance Date, of (A)
the Available Amount, plus (B) any Insured Payment over (ii) the Class A
Interest Distribution Amount; and
(b) the sum, without duplication, of:
(i) that portion of all scheduled installments of principal
in respect of the Mortgage Loans allocable to the Trust Balances of such
Mortgage Loans which is received (or advanced) during the related Due Period
together with all unscheduled recoveries of principal (including Prepayments,
Curtailments and Deficient Valuations) allocable to the Trust Balances of such
Mortgage Loans actually collected by the Servicer during the prior calendar
month,
(ii) the Trust Balance of each Mortgage Loan that either was,
effective on such Remittance Date, repurchased by the Seller or by the Depositor
or purchased by the Servicer during the preceding Due Period, but only to the
extent the amount equal to such Trust Balance is actually received by the
Trustee,
(iii) any Substitution Adjustment amounts delivered by the
Depositor on the related Remittance Date in connection with a substitution of a
Mortgage Loan, to the extent such Substitution Adjustments are actually received
by the Trustee,
(iv) with respect to each Mortgage Loan that became a
Liquidated Mortgage Loan during the prior calendar month, the Trust Balance of
such Mortgage Loan immediately prior to the time when such Mortgage Loan became
a Liquidated Mortgage Loan, and
(v) the proceeds received by the Trust Fund following any
termination of the REMIC 1995-2 carried out in accordance with a plan of
complete liquidation pursuant to Section 8.2 hereof or pursuant to the optional
termination of either the Trust Fund or the REMIC 1995-2 by either the Servicer
or Certificate Insurer in accordance with Section 8.1 hereof, up to the then
outstanding Class A Principal Balance.
"Class R Certificate" shall mean any Certificate denominated as
a Class R Certificate and subordinate to the Class A Certificates in right of
payment to the extent set forth herein, which Certificate shall be in the form
of Exhibit B-2 hereto.
"Class R Certificateholder" shall mean a Holder of a Class R
Certificate.
"Closing Date" shall mean December 6, 1995.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collection Account" shall mean the Eligible Account established
and maintained by the Servicer for the benefit of the Certificateholders and the
Holders of the Exchangeable Certificates and any Additional Certificates
pursuant to Section 5.3(a) hereof.
"Combined Loan-to-Value Ratio" shall mean, the sum of (x) any
outstanding first mortgage balance plus (y) the maximum available credit under
the Mortgage Loan as of the Cut-Off Date, divided by the Appraised Value of such
Mortgaged Property.
"Commission" shall mean the Securities and Exchange Commission.
"Compensating Interest" shall have the meaning defined in
Section 6.9 hereof.
"Curtailment" shall mean, with respect to a Mortgage Loan, any
payment of principal received during a Due Period as part of a payment that is
in excess of the amount of the Monthly Payment due for such Due Period and which
is neither intended to satisfy the Mortgage Loan in full, intended as an advance
payment of an amount due in a subsequent Due Period, nor intended to cure a
delinquency.
"Custodian" shall have the meaning defined in Section 2.2(c).
"Cut-Off Date" shall mean the close of business on October 31,
1995.
"Debt Service Reduction" shall mean, with respect to any
Mortgage Loan, a reduction by a court of competent jurisdiction of the Monthly
Payment due on such Mortgage Loan in a proceeding under the Bankruptcy Code,
except such a reduction that constitutes a Deficient Valuation or a permanent
forgiveness of principal.
"Deficiency Amount" shall mean, as of each Remittance Date, the
Class A Insured Distribution Amount.
"Deficient Valuation" shall mean, with respect to any Mortgage
Loan, a valuation of the related Mortgaged Property by a court of competent
jurisdiction in an amount less than the then outstanding principal balance of
the Mortgage Loan, which valuation results from a proceeding initiated under the
United States Bankruptcy Code.
"Deleted Mortgage Loan" shall mean a Mortgage Loan replaced by a
Qualified Substitute Mortgage Loan.
"Delinquency Calculation Amount" means, for any Remittance Date,
the sum of (i) the product of 0.1625 and the aggregate Principal Balance of all
Mortgage Loans which are between 30 and 59 days delinquent divided by the
aggregate Principal Balance of all Mortgage Loans, (ii) the product of 0.325 and
the aggregate Principal Balance of all Mortgage Loans which are between 60 and
89 days delinquent divided by the aggregate Principal Balance of all Mortgage
Loans, and (iii) 0.65 times the aggregate Principal Balance of all Mortgage
Loans which are more than 89 days delinquent divided by the aggregate Principal
Balance of all Mortgage Loans.
"Delinquency Collection Policies and Procedures" shall mean the
servicing policies of the Servicer pertaining to delinquent Mortgage Loans
attached hereto as Exhibit L.
"Delinquent" shall mean a Mortgage Loan is "delinquent" if any
payment due thereon is not made by the close of business on the day such payment
is scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment
has not been received by the close of business on the corresponding day of the
month immediately succeeding the month in which such payment was due, or, if
there is no such corresponding day (e.g., as when a 30-day month follows a 31-
day month in which a payment was due on the 31st day of such month) then on the
last day of such immediately succeeding month. Similarly for "60 days
delinquent," "90 days delinquent" and so on.
"Depositor" shall mean Prudential Securities Secured Financing
Corporation, a Delaware corporation, and any successor thereto.
"Depository" shall mean the Depository Trust Company, 7 Hanover
Square, New York, New York 10004 and any successor Depository hereafter named.
"Determination Date" shall mean the fourth Business Day prior to
the Remittance Date.
"Direct Participant" shall mean any broker-dealer, bank or other
financial institution for which the Depository holds Class A Certificates from
time to time as a securities depositary.
"Due Date" shall mean the fifteenth day of each calendar month.
"Due Period" shall mean, with respect to each Remittance Date,
the period beginning on the opening of business on the first day of the calendar
month preceding the calendar month in which such Remittance Date occurs, and
ending at the close of business on the last day of the calendar month preceding
the calendar month in which such Remittance Date occurs.
"Eligible Account" shall mean either (A) a segregated trust
account or accounts maintained with a depositary institution which is acceptable
to the Certificate Insurer and to each Rating Agency and such trust account
shall be held in (i) the corporate trust account department of such depositary
institution or (ii) an institution with capital and surplus of not less than
$50,000,000, and a minimum unsecured debt rating of BBB by S&P or Baa3 by
Moody's or (B) an account or accounts maintained with an institution acceptable
to the Certificate Insurer and whose deposits are insured by the FDIC, the
unsecured and uncollateralized debt obligations of which institution shall be
rated AA or better by S&P and Aa2 or better by Moody's and the highest short
term rating by S&P and Moody's, and which is (i) a federal savings and loan
association duly organized, validly existing and in good standing under the
federal banking laws, (ii) an institution duly organized, validly existing and
in good standing under the applicable banking laws of any state, (iii) a
national banking association (including the Trustee) duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company, or (v) approved in writing by the
Certificate Insurer, S&P and Moody's, having capital and surplus of not less
than $50,000,000, acting in its fiduciary capacity. Irwin Union Bank and Trust
Company and any of its affiliates will be prohibited from holding any Eligible
Account hereunder.
"ERISA" shall have the meaning defined in Section 4.2(i)(x)
hereof.
"Event of Default" shall have the meaning described in Section
7.1.
"Exchange" shall have the meaning described in Section 6.11
hereof.
"Exchange Notice" shall have the meaning described in Section
6.11.
"Exchangeable Certificate" shall mean the certificate issued
hereunder representing an undivided interest in the Trust Fund in an amount
equal to the Additional Balances of certain Mortgage Loans of the Trust Fund.
The identification of such Mortgage Loans shall be indicated, from time to time,
on one or more amended Mortgage Loan Schedules delivered from time to time that
shall specify that the interest in any Additional Balances corresponding to such
Mortgage Loans has been assigned to such Exchangeable Certificate.
"Exchangeable Certificate Account" shall mean the Exchangeable
Certificate Account(s) established in accordance with Section 6.1(b) hereof and
maintained by the Trustee.
"Exchangeable Certificate Allocation" shall mean the aggregated
sum of (a) with respect to any payment on, or monies collected in respect of, a
Mortgage Loan other than an Additional Mortgage Loan, the sum of (i) Interest
Collections less the REMIC Daily Interest, plus (ii) with respect to the
Principal Collections, zero, until the Trust Balance of the related Mortgage
Loan is reduced to zero, and thereafter, all Principal Collections with respect
to such Mortgage Loan, plus (iii) with respect to daily interest or investment
earnings on proceeds, collections, recoveries or other amounts received in
respect of a particular Mortgage Loan and on deposit in the Collection Account
or Trustee Collection Account, the product of such day's interest or investment
earnings and the fraction the numerator of which is the Additional Balance and
the denominator of which is the Principal Balance of such Mortgage Loan for such
day, and (b) with respect to each Additional Mortgage Loan, all payments of
principal, interest or Liquidation Proceeds.
"Exchange Notice" shall have the meaning described in Section
6.11 hereof.
"FDIC" shall mean the Federal Deposit Insurance Corporation and
any successor thereto.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation
and any successor thereto.
"Fiscal Agent" shall mean State Street Bank and Trust Company,
N.A.
"FNMA" shall mean the Federal National Mortgage Association and
any successor thereto.
"Foreclosure Profits" shall mean, as to any Remittance Date, the
excess, if any, of (i) Net Liquidation Proceeds in respect of each Mortgage Loan
that became a Liquidated Mortgage Loan during the month immediately preceding
the month of such Remittance Date over (ii) the sum of the unpaid principal
balance of each such Liquidated Mortgage Loan plus accrued and unpaid interest
at the applicable Mortgage Interest Rate on the unpaid principal balance thereof
from the Due Date to which interest was last paid by the Mortgagor (or, in the
case of a Liquidated Mortgage Loan that had been an REO Mortgage Loan, from the
Due Date to which interest was last deemed to have been paid pursuant to Section
5.12 to the first day of the month following the month in which such Mortgage
Loan became a Liquidated Mortgage Loan).
"Gross Margin" shall mean, as to each Mortgage Loan, the fixed
percentage set forth in the related Mortgage Note and indicated in the Mortgage
Loan Schedule as the "Gross Margin," which percentage is added to the applicable
prime rate on each Interest Adjustment Date to determine (subject to rounding,
any applicable statutory maximum interest rate, the Lifetime Floor and the
Lifetime Cap) the Mortgage Interest Rate on such Mortgage Loan until the next
Interest Adjustment Date.
"Hazardous Materials" shall mean any dangerous, toxic or
hazardous pollutants, chemical wastes or substances, including without
limitation those identified pursuant to CERCLA or any other federal, state or
local environmental related laws now existing or hereafter enacted.
"Holder" shall mean each Person in whose name a Certificate, the
Exchangeable Certificate or an Additional Certificate is registered in the
Certificate Register, except that, unless otherwise provided in an applicable
Supplement, solely for the purposes of giving any consent (except any consent
required to be obtained pursuant to Section 10.2), waiver, request or demand
pursuant to this Agreement, any Certificate, the Exchangeable Certificate or an
Additional Certificate registered in the name of the Servicer or any Subservicer
or the Seller, or any Affiliate of any of them, shall be deemed not to be
outstanding and in the case of any Certificate, the undivided interest in the
related REMIC evidenced thereby shall not be taken into account in determining
whether the requisite percentage of Certificates necessary to effect any such
consent, waiver, request or demand has been obtained. For purposes of any
consent, waiver, request or demand of the Holders of any Additional Certificates
pursuant to this Agreement, upon the Trustee's request, the Servicer and the
Seller shall provide to the Trustee a notice identifying any of their respective
Affiliates or the Affiliates of any Subservicer that is a Holder of an
Additional Certificate as of the date(s) specified by the Trustee in such
request.
"Indirect Participant" shall mean any financial institution for
whom any Direct Participant holds an interest in a Class A Certificate.
"Insurance Proceeds" shall mean proceeds paid by any insurer
pursuant to any insurance policy covering a Mortgage Loan to the extent such
proceeds are not applied to the restoration of the related Mortgaged Property or
released to the related Mortgagor in accordance with Accepted Servicing
Practices. "Insurance Proceeds" do not include "Insured Payments."
"Insured Payment" shall mean, the sum of (i) with respect to any
Remittance Date, the Deficiency Amount plus (ii) any unpaid Preference Amount.
"Interest Adjustment Date" shall mean with respect to a Mortgage
Loan, the date on which the Mortgage Interest Rate is or may be adjusted with
respect to such Mortgage Loan.
"Interest Collections" shall mean all amounts (including without
limitation, Monthly Payments (or Periodic Advances in respect thereof) and
Liquidation Proceeds) collected on any Mortgage Loan allocable to interest
pursuant to the terms of the related Mortgage Note, or if no provision for
allocation is made therein, pursuant to the terms hereof.
"Interest Determination Date" shall mean, with respect to any
Accrual Period, the second London Business Day preceding the first day of such
Accrual Period.
"Late Payment Rate" shall have the meaning assigned thereto in
the Certificate Insurance Agreement.
"LIBOR" shall mean, with respect to any Accrual Period, the rate
determined by the Trustee on the related Interest Determination Date on the
basis of the offered rates of the Reference Banks for one-month U.S. dollar
deposits, as such rates appear on the Reuters Screen LIBO Page, as of 11:00 a.m.
(London time) on such Interest Determination Date. On each Interest
Determination Date, LIBOR for the related Accrual Period will be established by
the Trustee as follows:
(i) If on such Interest Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for the related Due Period shall be
the arithmetic mean of such offered quotations (rounded upwards if necessary to
the nearest whole multiple of 0.0625%).
(ii) If on such Interest Determination Date fewer than two Reference
Banks provide such offered quotations, LIBOR for the related Due Period shall be
the higher of (i) LIBOR as determined on the previous Interest Determination
Date and (ii) the Reserve Interest Rate.
"Lifetime Cap" shall mean, as to any Mortgage Loan, the maximum
Mortgage Interest Rate set forth in the related Mortgage Note and indicated in
the Mortgage Loan Schedule, which rate may be applicable to such Mortgage Loan
at any time during the life of such Mortgage Loan.
"Lifetime Floor" shall mean, as to any Mortgage Loan, the
minimum Mortgage Interest Rate set forth in the related Mortgage Note and
indicated in the Mortgage Loan Schedule, which rate may be applicable to such
Mortgage Loan at any time during the life of such Mortgage Loan.
"Liquidated Mortgage Loan" shall mean a Mortgage Loan with
respect to which the related Mortgaged Property has been acquired, liquidated
and/or foreclosed upon by the Servicer or which the Servicer elected to write
down to a zero outstanding Principal Balance in respect of an outstanding
delinquency on such Mortgage Loan equal to or greater than 270 days and with
respect to which the Servicer determines that all Liquidation Proceeds which it
expects to recover have been recovered; it being understood that such written-
down Mortgage Loan shall be repurchased from the Trust at a price equal to its
outstanding Trust Balance and that the Trust Balance and any Additional Balance
on such written-down Mortgage Loan shall thereby be reduced to zero and the
written-down Mortgage Loan shall be removed from the assets of the Trust Fund as
of the date of such 270 day delinquency.
"Liquidated Loan Loss" shall mean, with respect to any
Remittance Date, the aggregate of the amount of losses with respect to each
Mortgage Loan which became a Liquidated Mortgage Loan prior to the Due Date
preceding such Remittance Date, equal to the excess of (i) the unpaid principal
balance of each such Liquidated Mortgage Loan, plus accrued interest thereon in
accordance with the amortization schedule at the time applicable thereto at the
applicable Mortgage Interest Rate from the Due Date as to which interest was
last paid with respect thereto through the last day of the month in which such
Mortgage Loan became a Liquidated Mortgage Loan, over (ii) Net Liquidation
Proceeds with respect to such Liquidated Mortgage Loan.
"Liquidation Expenses" shall mean expenses incurred by the
Servicer in connection with the liquidation of any defaulted Mortgage Loan, REO
Mortgage Loan or REO Property (including, without limitation, legal fees and
expenses, committee or referee fees, and, if applicable, brokerage commissions
and conveyance taxes), any unreimbursed amount expended by the Servicer pursuant
to Sections 5.5, 5.6 and 5.12 respecting the related Mortgage Loan and any
unreimbursed expenditures for real property taxes or for property restoration or
preservation of the related Mortgaged Property. Liquidation Expenses shall not
include any previously incurred expenses in respect of an REO Mortgage Loan
which have been netted against related REO Proceeds.
"Liquidation Proceeds" shall mean amounts received (or in the
case of Liquidated Mortgage Loans written-down by the Servicer, amounts
deposited) by the Servicer (including Insurance Proceeds) in connection with the
liquidation of defaulted or written-down Mortgage Loans or property acquired in
respect thereof, whether through foreclosure, sale or otherwise, including
payments in connection with such Mortgage Loans received from the Mortgagor,
other than amounts required to be paid to the Mortgagor pursuant to the terms of
the applicable Mortgage or to be applied otherwise pursuant to law.
"Loan Repurchase Price" shall have the meaning defined in
Section 2.4(b).
"Loan-to-value Ratio" or "LTV" shall mean, with respect to any
Mortgage Loan, the fraction, expressed as a percentage, the numerator of which
is 100% of the Principal Balance of such Mortgage Loan, as of the Cut-Off Date,
the denominator of which is the Appraised Value of the related Mortgaged
Property, reduced by the value of any lien superior to the lien of the Mortgage
Loan.
"London Business Day" shall mean any day in which banks in the
City of London are open and conducting transactions in U.S. dollars.
"Majority Certificateholders" shall mean, with respect to the
related REMIC, the Holder or Holders of Class A Certificates evidencing an
undivided beneficial ownership interest in such REMIC in excess of 51% in the
aggregate.
"Maturity Date" shall mean the latest possible maturity date as
defined in Section 1.860G-1(a)(4)(iii) of the proposed Treasury regulations, by
which the Certificates representing a regular interest in the REMIC of the Trust
Fund would be reduced to zero as determined under a hypothetical scenario that
assumes, among other things, that (a) scheduled interest and principal payments
on the Mortgage Loans are received in a timely manner, with no delinquencies or
losses, (b) there are no principal prepayments on the Mortgage Loans, (c) the
Seller and the Servicer will not repurchase any Mortgage Loan and neither the
Seller, the Servicer nor the Certificate Insurer will exercise its option to
purchase the Mortgage Loans and thereby cause a termination of the REMIC of the
Trust Fund, and (d) the Mortgage Loans have an original term to maturity of 240
months and, on a latest maturing loan basis, a remaining term to maturity of 240
months.
"Monthly Payment" shall mean, as to any Mortgage Loan (including
any REO Mortgage Loan) and any Due Date, the scheduled payment of principal and
interest due thereon by such Due Date (after adjustment for any Curtailments and
Deficient Valuations occurring prior to such Due Date but before any adjustment
to such amortization schedule by reason of any bankruptcy, other than Deficient
Valuations or similar proceeding or any moratorium or similar waiver or grace
period). With respect to any Monthly Payment made by or on behalf of a
Mortgagor and received by the Servicer, 100% of the principal payment portion of
such Monthly Payment shall be applied to the outstanding Trust Balance until
such Trust Balance shall be reduced to zero; the interest payment portion of
such Monthly Payment shall be appropriately allocated to the Trust Balance and
the Additional Balance of such Mortgage Loan as provided for herein.
"Moody's" shall mean Moody's Investors Service, Inc., a
corporation organized and existing under Delaware law, or any successor thereto
and if such corporation no longer for any reason performs the services of a
securities rating agency, "Moody's" shall be deemed to refer to any other
nationally recognized rating agency designated by the Certificate Insurer.
"Mortgage" shall mean the mortgage, deed of trust or other
instrument creating a first lien on the Mortgaged Property.
"Mortgage File" shall include the Mortgage Loan documents
described in Section 2.3 hereof and such documents as are applicable from those
listed on Exhibit C attached hereto.
"Mortgage Interest Rate" shall mean, as to any Mortgage Loan,
the per annum rate at which interest accrues on the unpaid principal balance
thereof, as adjusted from time to time in accordance with the provisions of the
related Mortgage Note.
"Mortgage Loan" shall mean (i) each home equity revolving credit
line loan identified on the Mortgage Loan Schedule on the Closing Date, (ii) any
additional such home equity revolving credit line loans identified on the
Mortgage Loan Schedule after the Closing Date, as such schedule is amended and
supplemented from time to time to reflect the substitution of Qualified
Substitute Mortgage Loans for loans deleted from the Trust Fund, (iii) from and
after the date a mortgage loan becomes an Additional Mortgage Loan in accordance
with Section 6.11 hereof, each Additional Mortgage Loan, (iv) each Mortgage Note
evidencing any credit line loan referred to in (i), (ii) or (iii) above,
including all amounts now or hereafter due under such Mortgage Notes whether
relating to such credit line loans or other loans which may be made from time to
time and (v) the related Mortgage. Unless otherwise clearly indicated by the
context, Mortgage Loan shall be deemed to refer to the related REO Mortgage Loan
and REO Property.
"Mortgage Loan Interest Shortfall" shall mean, with respect to
any Remittance Date, as to any Mortgage Loan, any Prepayment Interest Shortfall
for which no payment of Compensating Interest is paid.
"Mortgage Loan Sale Agreement" shall mean the Mortgage Loan Sale
Agreement dated as of December 6, 1995, between Irwin Union Bank and Trust
Company, as seller thereunder, and IHE Funding Corp., as purchaser thereunder,
as such agreement may be amended, modified or supplemented from time to time.
"Mortgage Loan Schedule" shall mean the list of the Mortgage
Loans transferred to the Trustee on the Closing Date as part of the Trust Fund
and attached hereto as Exhibit D (and also provided to the Trustee on a computer
readable magnetic tape or disk) and any Additional Mortgage Loans transferred to
the Trustee pursuant to any Supplement as provided in Section 6.11 and attached
to such Supplement as an Exhibit (and also provided to the Trustee on a computer
readable magnetic tape or disk). The identification of such Mortgage Loans shall
be amended, from time to time, in order to specify the interest in, and
allocation of the Principal Balance of a Mortgage Loan between the Trust Balance
of such Mortgage Loan and any Additional Balance assigned to one or more
Exchangeable Certificates. The Mortgage Loan Schedule shall set forth at a
minimum the following information as to each Mortgage Loan:
(i) the Mortgage Loan identifying number;
(ii) the Principal Balance of the Mortgage Loan and the allocation of such
Principal Balance between the Trust Balance and any Additional Balance for such
Mortgage Loan;
(iii) the city, state and zip code of the Mortgaged Property;
(iv) the type of property;
(v) the current Monthly Payment as of the Cut-Off Date (and with respect to
any Additional Mortgage Loan, the current Monthly Payment as of the cut off date
applicable thereto);
(vi) the original number of months to maturity;
(vii) the scheduled maturity date;
(viii) the Trust Balance of such Mortgage Loan as of the Cut-Off Date (or, with
respect to any substituted Mortgage Loans, the revised Trust Balance as of the
date of such substitution);
(ix) the Loan-to-Value Ratio at origination and the Combined Loan-to-Value
Ratio as of the Cut-Off Date;
(x) the Mortgage Interest Rate as of the Cut-Off Date, or, with respect to
Additional Mortgage Loans, the cut-off date applicable thereto (the "current
Mortgage Interest Rate");
(xi) the Gross Margin;
(xii) the first possible Interest Adjustment Date after the Cut-Off Date (and,
with respect to each Additional Mortgage Loan, the first possible Interest
Adjustment Date after the cut-off date applicable thereto);
(xiii) the Lifetime Cap;
(xiv) the Lifetime Floor;
(xv) the Appraised Value;
(xvi) the documentation type (as described in the Underwriting Guidelines);
(xvii) the loan classification (as described in the Underwriting Guidelines);
and
(xviii) the lien priority of each Mortgage Loan.
provided, however, that a Mortgage Loan Schedule may also be provided with
respect to the issuance of more than one Exchangeable Certificate; such Schedule
shall at least include items (i) and (ii) above as to any such Exchangeable
Certificate.
Such "Mortgage Loan Schedule" may consist of multiple reports that collectively
set forth all of the information required, including the aggregate number of
Mortgage Loans and the Cut-Off Date Aggregate Trust Balance. In addition, a
summary of the information regarding the Mortgage Loans shall be included as a
part of the Mortgage Loan Schedule which summary shall include such consolidated
and aggregated information as may be requested by the Trustee from time to time.
"Mortgage Note" shall mean the original, executed note or other
evidence of indebtedness evidencing the indebtedness of a Mortgagor under a
Mortgage Loan.
"Mortgaged Property" shall mean the underlying property securing
a Mortgage Loan, consisting of a fee simple estate in a single parcel of land
improved by a Residential Dwelling.
"Mortgaged Property State" shall mean any state in which any
Mortgaged Property is located.
"Mortgagor" shall mean the obligor on a Mortgage Note.
"Net Available Funds Excess" shall mean, as of any Remittance
Date, the excess, if any, of (x) the Available Funds Excess for such Remittance
Date over (y) the Reimbursement Amount for such Remittance Date, but in no event
less than zero.
"Net Foreclosure Profits" shall mean, as to any Remittance Date,
the excess, if any, of (i) the aggregate Foreclosure Profits with respect to
such Remittance Date over (ii) the Liquidated Loan Loss with respect to such
Remittance Date.
"Net Liquidation Proceeds" shall mean, as to any Liquidated
Mortgage Loan, Liquidation Proceeds net of Liquidation Expenses and net of any
unreimbursed Periodic Advances made by the Servicer. For all purposes of this
Agreement, Net Liquidation Proceeds shall be allocated first to accrued and
unpaid interest on the related Mortgage Loan and then to the unpaid principal
balance thereof.
"Net Mortgage Interest Rate" shall mean, with respect to each
Mortgage Loan at any time of determination, a rate equal to (i) the Mortgage
Interest Rate on such Mortgage Loan minus (ii) the sum of the rates (computed on
an annualized basis) used to determine the related Administrative Costs. Any
regular monthly computation of interest at such rate shall be based upon annual
interest at such rate on the applicable amount divided by twelve.
"Net REO Proceeds" shall mean, as to any REO Mortgage Loan, REO
Proceeds net of any related expenses of the Servicer.
"Nonrecoverable Advances" shall mean, with respect to any
Mortgage Loan, (a) any Periodic Advance previously made and not reimbursed from
late collections pursuant to Section 5.4(b), or (b) a Periodic Advance proposed
to be made in respect of a Mortgage Loan or REO Property either of which, in the
good faith business judgment of the Servicer, as evidenced by an Officer's
Certificate delivered to the Certificate Insurer and the Trustee no later than
the Business Day following such determination, would not be ultimately
recoverable pursuant to Section 5.4.
"Officer's Certificate" shall mean a certificate signed by the
Chairman of the Board, the President or a Vice President and the Treasurer, the
Secretary or one of the Assistant Treasurers or Assistant Secretaries of the
Seller and/or the Servicer, or the Depositor, as required by this Agreement.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may, without limitation, be counsel for the Seller, the Servicer, the
Trustee, a Certificateholder or a Certificateholder's prospective transferee or
the Certificate Insurer (including except as otherwise provided herein, in-house
counsel) reasonably acceptable to each addressee of such opinion and experienced
in matters relating to the subject of such opinion; except that any opinion of
counsel relating to (a) the qualification of the REMIC 1995-2 as a REMIC or (b)
compliance with the REMIC Provisions must be an opinion of counsel who (i) is in
fact independent of the Seller, the Servicer and the Trustee, (ii) does not have
any direct financial interest or any material indirect financial interest in the
Seller or the Servicer or the Trustee or in an Affiliate thereof, (iii) is not
connected with the Seller or the Servicer or the Trustee as an officer,
employee, director or person performing similar functions and (iv) is reasonably
acceptable to the Certificate Insurer. The Certificate Insurer shall be an
addressee on each Opinion of Counsel relating to, or otherwise affecting, the
Series 1995-2 Certificates.
"Original Class A Principal Balance" shall mean, as of the
Startup Day and as to the Class A Certificates, the aggregate principal balance
of the Mortgage Loans as of the Cut-Off Date equal to $51,583,721.78.
"Other Certificates" shall mean the new Series of Additional
Certificates issued pursuant to an Exchange as described in Section 6.11.
"Outstanding Mortgage Loan" shall mean, as to any Due Date, a
Mortgage Loan (including an REO Mortgage Loan) which has not been prepaid in
full prior to such Due Date, which did not become a Liquidated Mortgage Loan
prior to such Due Date and which was not repurchased by the Seller prior to such
Due Date pursuant to Section 2.4.
"Ownership Interest" shall mean, as to any Certificate, any
ownership or security 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, as owner or as pledgee.
"Owner-Occupied Mortgaged Property" shall mean a Residential
Dwelling as to which (a) the related Mortgagor represented an intent to occupy
as such Mortgagor's primary, secondary or vacation residence at the origination
of the Mortgage Loan, and (b) the Seller has no actual knowledge that such
Residential Dwelling is not so occupied.
"Percentage Interest" shall mean, with respect to a Class A
Certificate, the portion of the total beneficial ownership interest in the
related REMIC evidenced by such Certificate, expressed as a percentage rounded
to four decimal places, equal to a fraction the numerator of which is the
original denomination of such Certificate and the denominator of which is the
Original Class A Principal Balance. With respect to a Class R Certificate, the
portion evidenced thereby as stated on the face of such Certificate. With
respect to an Exchangeable Certificate or an Additional Certificate, the portion
of the total beneficial ownership interest in the Additional Balances on the
Mortgage Loans and in the Additional Mortgage Loans held by the Trust as stated
on the face of such Exchangeable Certificate and Additional Certificate.
"Periodic Advance" shall mean the aggregate of the advances
required to be made by the Servicer on any Servicer Remittance Date pursuant to
Section 5.21 hereof, the amount of any such advances being equal to the sum of:
(i) all Monthly Payments (net of the related Servicing Fee and any amount
excluded from the Servicer Remittance Amount pursuant to clauses (a)-(i) of the
definition of "Servicer Remittance Amount") on the Mortgage Loans that are not
received by the Servicer as of the close of business on the day preceding the
related Determination Date and have not been determined by the Servicer to be
Nonrecoverable Advances, plus (ii) with respect to each REO Property which was
acquired during or prior to the related Due Period and as to which an REO
Disposition did not occur during the related Due Period, an amount equal to the
excess, if any, of (a) interest on the Trust Balance of the related REO Mortgage
Loan at the related Mortgage Interest Rate, net of the Servicing Fee, for the
most recently ended Due Period for the related Mortgage Loan over (b) the net
income from the REO Property transferred to the Certificate Account for such
Remittance Date.
"Permitted Investments" shall mean, as used herein, Permitted
Investments shall include the following:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States and any
obligation of, or guaranties by, FHLMC or FNMA (other than senior debt
obligations and mortgage pass-through certificates guaranteed by FHLMC or FNMA)
shall be a Permitted Investment; provided that at the time of such investment,
such investment is acceptable to the Certificate Insurer, but excluding any of
such securities whose terms do not provide for payment of a fixed dollar amount
upon maturity or call for redemption;
(b) federal funds and certificates of deposit, time and demand
deposits and banker's acceptances issued by any bank or trust company
incorporated under the laws of the United States or any state thereof and
subject to supervision and examination by federal or state banking authorities,
provided that at the time of such investment or contractual commitment providing
for such investment the short-term debt obligations of such bank or trust
company at the date of acquisition thereof have been rated A-1+ by S&P and P-1
by Moody's;
(c) commercial paper (having original maturities of not more
than 180 days) rated A-1+ by S&P and P-1 by Moody's;
(d) investments in money market funds rated "AAAm" or "AAAm-G"
by S&P and Aaa by Moody's; and
(e) investments approved by S&P, Moody's and the Certificate
Insurer in writing delivered to the Trustee;
provided, that each such Permitted Investment shall be a "permitted investment"
within the meaning of Section 860G(a)(5) of the Code and that no instrument
described hereunder shall evidence either the right to receive (x) only interest
with respect to the obligations underlying such instrument or (y) both principal
and interest payments derived from obligations underlying such instrument and
the interest and principal payments with respect to such instrument provided a
yield to maturity at par greater than 120% of the yield to maturity at par of
the underlying obligations; and provided, further, that no instrument described
hereunder may be purchased at a price greater than par if such instrument may be
prepaid or called at a price less than its purchase price prior to stated
maturity.
"Permitted Transferee" shall mean any Person other than (a) the
United States, any State or political subdivision thereof, or any agency or
instrumentality of any of the foregoing, (b) a foreign government, International
Organization or any agency or instrumentality of either of the foregoing, (c) an
organization (except certain farmers' cooperatives described in Section 521 of
the Code) which is exempt from tax imposed by Chapter I of the Code (including
the tax imposed by Section 511 of the Code on unrelated business taxable income)
on any excess inclusions (as defined in Section 860E(c)(1) of the Code) with
respect to any Class R Certificate, (d) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code and (e) any other
Person so designated by the Trustee based upon an Opinion of Counsel to the
Trustee and the Certificate Insurer that the transfer of an Ownership Interest
in a Class R Certificate to such Person may cause either (i) the applicable
REMIC to fail to qualify as a REMIC at any time that the Class A Certificates
are outstanding or (ii) the applicable REMIC of the Trust Fund or any Person
having an Ownership Interest in any Class of Certificates, other than such
Person, to incur a liability for any federal tax imposed under the Code that
would not otherwise be imposed but for the Transfer of an Ownership Interest in
a Class R Certificate to such Person. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions. A corporation will not be treated as an
instrumentality of the United States or of any State or political subdivision
thereof for these purposes if all of its activities are subject to tax and, with
the exception of FHLMC, a majority of its board of directors is not selected by
such governmental unit.
"Person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, national banking
association, unincorporated organization or government or any agency or
political subdivision thereof.
"Plan" shall have the meaning defined in Section 4.2(i)(x).
"Preference Amount" shall mean any amount previously distributed
to a Class A Certificateholder that is recoverable and sought to be recovered as
a voidable preference by a trustee in bankruptcy pursuant to the U.S. Bankruptcy
Code as amended from time to time, in accordance with a final nonappealable
order of a court having competent jurisdiction.
"Preference Claim" shall have the meaning defined in Section
6.4(f).
"Premium Percentage" shall have the meaning assigned thereto in
the Certificate Insurance Agreement.
"Prepayment Assumption" shall mean a constant prepayment rate of
26%, used solely for determining the accrual of original issue discount and
market discount on the Certificates for federal income tax purposes.
"Prepayment Interest Shortfall" shall mean, with respect to any
Remittance Date, for each Mortgage Loan that was the subject during the related
Due Period of a Principal Prepayment or Curtailment, an amount equal to the
excess, if any, of (a) 30 days' interest on the Trust Balance of such Mortgage
Loan at a per annum rate equal to the Mortgage Interest Rate (or at such lower
rate as may be in effect for such Mortgage Loan pursuant to application of the
Civil Relief Act, any Deficient Valuation and/or any Debt Service Reduction)
minus the rate at which the Servicing Fee is calculated over (b) the amount of
interest actually remitted by the Mortgagor in connection with such Principal
Prepayment or Curtailment less the Servicing Fee for such Mortgage Loan in such
month.
"Principal Balance" shall mean, as to any Mortgage Loan and
Remittance Date, the outstanding principal balance of such Mortgage Loan as of
the last day of the Due Period related to such Remittance Date after giving
effect to Principal Prepayments received and payments of principal collected
during such Due Period, Deficient Valuations incurred prior to the Due Date in
such Due Period and any Curtailments applied by the Servicer in reduction of the
unpaid principal balance of such Mortgage Loan as of such Due Date.
"Principal Collections" shall mean all amounts collected with
respect to a Mortgage Loan including, without limitation, Monthly Payments (or
Periodic Advances made in respect thereof), any Loan Repurchase Price and
Substitution Adjustments allocable to principal pursuant to the terms of the
related Mortgage Note, or, if no provision for allocation is made therein, in
accordance with the terms hereof.
"Principal Prepayment" shall mean any payment or other recovery
of principal on a Mortgage Loan equal to the outstanding principal balance
thereof, received in advance of the final scheduled Due Date which is not
intended as an advance payment of a Scheduled Monthly Payment.
"Prospectus Supplement" shall mean the Prospectus Supplement
dated December 1, 1995, as amended and supplemented, relating to the Class A
Certificates and filed with the Commission in connection with the Registration
Statement heretofore filed or to be filed with the Commission pursuant to Rule
424(b)(2) or 424(b)(5).
"Purchase and Sale Agreement" shall mean the Purchase and Sale
Agreement, dated as of the date hereof, between the Seller and the Depositor and
relating to the sale of the Mortgage Loans to the Depositor.
"Qualified Appraiser" shall mean an appraiser, duly appointed by
the Servicer, who had no interest, direct or indirect, in the Mortgaged Property
or in any loan made on the security thereof, and whose compensation is not
affected by the approval or disapproval of the Mortgage Loan, and such appraiser
and the appraisal made by such appraiser both satisfy the requirements of Title
XI of the Federal Institutions Reform, Recovery and Enforcement Act of 1989 and
the regulations promulgated thereunder, all as in effect on the date the
Mortgage Loan was originated.
"Qualified Mortgage" shall have the meaning set forth from time
to time in the definition of "Qualified Mortgage" at Section 860G(a)(3) of the
Code (or any successor statute thereto).
"Qualified Substitute Mortgage Loan" shall mean a mortgage loan
or mortgage loans which (a) uses or use the prime rate as its base interest rate
and has or have a margin over such base interest rate and, where applicable,
maximum interest rate, at least equal to those applicable to the Deleted
Mortgage Loan for which it is to be substituted, (b) relates or relate to a
detached one-family residence or to the same type of Residential Dwelling as the
Deleted Mortgage Loan for which it is to be substituted and in each case has or
have the same or a better lien priority as the Deleted Mortgage Loan for which
it is to be substituted and has or have the same occupancy status or is an
Owner-Occupied Mortgaged Property, (c) matures or mature no later than (and not
more than one year earlier than) the Deleted Mortgage Loan for which it is to be
substituted, (d) has or have a Combined Loan-to-Value Ratio or Combined Loan-to-
Value Ratios at the time of such substitution no higher than the Combined Loan-
to-Value Ratio of the Deleted Mortgage Loan for which it is to be substituted,
(e) has or have a principal balance or principal balances (after application of
all payments received on or prior to the date of substitution) not substantially
less and not more than the Trust Balance of the Deleted Mortgage Loan for which
it is to be substituted as of such date, (f) satisfies or satisfy the criteria
set forth from time to time in the definition of "qualified replacement
mortgage" at Section 860G(a)(4) of the Code (or any successor statute thereto),
(g) has or have an applicable borrower or borrowers with the same or better
traditionally ranked credit status as the borrower or borrowers under the
Deleted Mortgage Loan for which it is to be substituted, and (h) complies or
comply as of the date of substitution with each representation and warranty set
forth in Sections 3.1 and 3.2 of the Purchase and Sale Agreement.
"Rating Agency" shall mean S&P or Moody's.
"Record Date" shall mean, with respect to any Remittance Date,
the close of business on the last day of the calendar month immediately
preceding the month in which such Remittance Date occurs. The Record Date for
the first Distribution Date shall be the Closing Date.
"Reference Banks" shall mean Bankers Trust Company, Barclay's
Bank PLC, The Bank of Tokyo and National Westminster Bank PLC; provided that if
any of the foregoing banks are not suitable to serve as a Reference Bank, then
any leading banks selected by the Trustee which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) not controlling, under the control
of or under common control with the Company or any affiliate thereof, (iii)
whose quotations appear on the Reuters Screen LIBO Page on the relevant Interest
Determination Date and (iv) which have been designated as such by the Trustee.
"Reimbursement Amount" shall mean, as of any Remittance Date,
the sum of (i) all Insured Payments previously paid by the Certificate Insurer
and in each case not previously repaid to the Certificate Insurer pursuant to
Section 6.5(a)(v) hereof plus (ii) interest accrued on such Insured Payments not
previously repaid calculated at the Late Payment Rate from the date such Insured
Payment was paid, plus (iii) any amounts then due and owing to the Certificate
Insurer under the Certificate Insurance Agreement, as certified to the Trustee
by the Certificate Insurer, plus (iv) interest on such amounts at the Late
Payment Rate. The Certificate Insurer shall notify the Trustee and the
Depositor of the amount of any Reimbursement Amount.
"Released Mortgaged Property Proceeds" shall mean, as to any
Mortgage Loan, proceeds received by the Servicer in connection with (a) a taking
of an entire Mortgaged Property by exercise of the power of eminent domain or
condemnation or (b) any release of part of the Mortgaged Property from the lien
of the related Mortgage, whether by partial condemnation, sale or otherwise;
which are not released to the Mortgagor in accordance with applicable law,
Accepted Servicing Practices and this Agreement.
"REMIC" shall mean a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code.
"REMIC Change of Law" shall mean any proposed, temporary or
final regulation, revenue ruling, revenue procedure or other official
announcement or interpretation relating to the REMIC and the REMIC Provisions
issued after the Closing Date.
"REMIC Daily Interest" shall mean, with respect to any payment
on a Mortgage Loan made by or on behalf of the related Mortgagor, the portion of
such payment equal to the aggregate sum of the daily product (calculated for
each day in the Due Period) of (x) the outstanding Trust Balance of such
Mortgage Loan on such day and (y) the Mortgage Interest Rate applicable to such
Mortgage Loan
"REMIC 1995-2" shall mean the segregated pool of assets subject
hereto, and to be administered hereunder, consisting of: (a) the Trust Balances
of such Mortgage Loans as from time to time are subject to this Agreement,
together with the Mortgage Files relating thereto and all collections thereon
and proceeds thereof, (b) such assets as from time to time are identified as REO
Property of the REMIC 1995-2 and collections thereon and proceeds thereof, (c)
assets deposited in the Certificate Account or the Reserve Account in respect of
the Trust Balances, including any such amounts on deposit in the Certificate
Account or the Reserve Account invested in Permitted Investments, (d) the
Trustee's rights with respect to the Mortgage Loans under all insurance policies
(other than the Certificate Insurance Policy) required to be maintained pursuant
to this Agreement and any Insurance Proceeds, (e) with respect to each Mortgage
Loan that becomes a Defaulted Loan and the Trust Balance of which has been
assigned to the REMIC 1995-2, Liquidation Proceeds allocable to such Trust
Balance and (f) with respect to each Mortgage Loan the Trust Balance of which
has been assigned to the REMIC 1995-2, Released Mortgaged Property Proceeds
allocable to such Trust Balance.
"REMIC Provisions" shall mean provisions of the federal income
tax law relating to real estate mortgage investment conduits, which appear at
Sections 860A through 860G of Subchapter M of Chapter I of the Code, and related
provisions, and temporary and final regulations promulgated thereunder and
published rulings, notices and announcements, as the foregoing may be in effect
from time to time.
"Remittance Date" shall mean the 15th day of any month or if
such 15th day is not a Business Day, the first Business Day immediately
following, commencing on December 15, 1995.
"REO Disposition" shall mean the final sale by the Servicer of a
Mortgaged Property acquired by the Servicer in foreclosure or by deed in lieu of
foreclosure.
"REO Mortgage Loan" shall mean any Mortgage Loan which is not a
Liquidated Mortgage Loan and as to which the indebtedness evidenced by the
related Mortgage Note is discharged and the related Mortgaged Property is held
as part of the Trust Fund.
"REO Proceeds" shall mean proceeds received in respect of any
REO Mortgage Loan (including, without limitations, proceeds from the rental of
the related Mortgaged Property).
"REO Property" shall have the meaning described in Section 5.12.
"Representation Letter" shall mean letters to, or agreements
with, the Depository to effectuate a book entry system with respect to the Class
A Certificates registered in the Certificate Register under the nominee name of
the Depository.
"Request for Release" shall mean a request for release in
substantially the form attached as Exhibit H hereto.
"Required Reserve Account Level" shall be determined in
accordance with the Certificate Insurance Agreement which provides that, on the
Closing Date, the amount on deposit in the Reserve Account will be equal to
5.75% of the Original Class A Principal Balance, and (i) for any Remittance Date
occurring during the period commencing on the Closing Date and ending on the
later of (a) the first Remittance Date on which the Class A Principal Balance is
less than or equal to $25,791,860.50 and (b) the 30th Remittance Date after the
Closing Date, an amount equal to the greater of (1) $4,384,616 and (2) two times
the difference between (A) the aggregate outstanding Principal Balance of all
Mortgage Loans which are more than ninety (90) days delinquent (including REO
Mortgage Loans) and (B) three times the Net Available Funds Excess for such
Remittance Date; (ii) for any Remittance Date occurring after the period
referenced in clause (i) above, an amount equal to the greatest of: (a) the
lesser of (1) $4,384,616 and (2) 17% multiplied by the balance of the then
outstanding Class A Certificates, (b) two times the difference between (1) the
aggregate outstanding Principal Balance of all Mortgage Loans which are more
than ninety days delinquent (including REO Mortgage Loans) and (2) three times
the Net Available Funds Excess from such Remittance Date, and (c) $257,918.60.
Notwithstanding the above, the Required Reserve Account Level for any Remittance
Date and, subject to the provisions of the following sentence, for each
subsequent Remittance Date, shall be $5,086,155 in the event that the aggregate
Principal Balance of all Mortgage Loans which are more than ninety (90) days
delinquent equals or exceeds 3% of the then outstanding aggregate Principal
Balance of all Mortgage Loans. In the event that the Required Reserve Account
Level has increased to $5,086,155 pursuant to the provisions of this paragraph,
the Required Reserve Account Level for a Remittance Date shall be reduced to
$4,384,616 if the aggregate Principal Balance of all Mortgage Loans which are
more than ninety (90) days delinquent has been below 3% of the then outstanding
aggregate Principal Balance of all Mortgage Loans as of each of the six
immediately prior Remittance Dates. Notwithstanding the foregoing, the Required
Reserve Account Level shall not be reduced below the Required Reserve Account
Level on the Remittance Date prior to the Remittance Date on which an Insured
Payment is made.
"Reserve Account" shall mean that Eligible Account more fully
described in Section 6.4 established by the Servicer for the benefit of the
Trust, the Certificateholders and the Certificate Insurer, from which
withdrawals will be made for the payment of the Class A Insured Distribution
Amounts. The Reserve Account shall not benefit any Additional Certificate or
any Exchangeable Certificate.
"Reserve Interest Rate" shall mean, with respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 0.0625%) of the one-month U.S. dollar lending rates which New York
City banks selected by the Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Trustee can determine no
such arithmetic mean, the lowest one-month U.S. dollar lending rate which New
York City banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.
"Residential Dwelling" shall mean a one- to four-family
dwelling, a unit in a planned unit development, a unit in a condominium
development, a townhouse or a manufactured housing unit which is non-mobile.
"Responsible Officer" shall mean, when used with respect to the
Trustee, any officer assigned to the Corporate Trust Division (or any successor
thereto), including any Vice President, Senior Trust Officer, Trust Officer,
Assistant Trust Officer, any Assistant Secretary, any trust officer or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and to whom, with respect to a
particular matter, such matter is referred because of such officer's knowledge
of and familiarity with the particular subject. When used with respect to the
Seller or the Servicer, the President or any Vice President, Assistant Vice
President, or any Secretary or Assistant Secretary.
"S&P" shall mean Standard & Poor's Ratings Services, Inc. or any
successor thereto and if such corporation no longer for any reason performs the
services of a securities rating agency, "S&P" shall be deemed to refer to any
other nationally recognized statistical rating organization designated by the
Certificate Insurer.
"Seller" shall mean IHE Funding Corp., a Delaware corporation.
"Series" shall mean any designated Series of certificates issued
hereunder and governed by this Agreement (except to the extent such Series is
modified by a Supplement amending the terms and provisions applicable to such
Series). When used herein, "this Series" shall refer to the Mortgage Pass-
Through Certificates, Series 1995-2 and "new Series" shall mean any Series of
certificates issued pursuant to an Exchange and which shall not include any
Exchangeable Certificate.
"Servicer" shall mean Irwin Home Equity Corporation, an Indiana
corporation, or any successor appointed as herein provided.
"Servicer Employees" shall have the meaning as defined in
Section 5.8 hereof.
"Servicer Remittance Amount" shall mean, with respect to any
Servicer Remittance Date, an amount equal to the sum of (i) all unscheduled
collections of principal and interest on the Mortgage Loans (including Principal
Prepayments, Curtailments, Net REO Proceeds and Net Liquidation Proceeds, if
any, and any amounts deposited in the Collection Account or Trustee Collection
Account in connection with a complete plan of liquidation of the assets of the
Trust or termination of the Trust) collected by the Servicer during the Due
Period and all scheduled Monthly Payments due on the Due Date and received by
the Servicer on or prior to the Business Day preceding the related Determination
Date, plus (ii) all Periodic Advances made by the Servicer with respect to
payments due to be received on the Mortgage Loans on the related Due Date plus
(iii) the amount of Compensating Interest due with respect to the related Due
Period, plus (iv) any other amounts required to be placed in the Collection
Account by the Servicer pursuant to this Pooling and Servicing Agreement but
excluding, without duplication, the following:
(a) amounts received on particular Mortgage Loans as late
payments of principal or interest and respecting which the Servicer has
previously made an unreimbursed Periodic Advance;
(b) the portion of Liquidation Proceeds used to reimburse any
unreimbursed Periodic Advances by the Servicer;
(c) those portions of each payment of interest on a particular
Mortgage Loan which represent the Servicing Fee;
(d) that portion of Liquidation Proceeds and REO Proceeds which
represents any unpaid Servicing Fee;
(e) all income from Permitted Investments that is held in the
Collection Account for the account of the Servicer;
(f) all amounts in respect of late fees, assumption fees,
prepayment fees and similar fees;
(g) all other amounts which are explicitly reimbursable to the
Servicer hereunder, including (i) as provided in Section 5.4 hereof; and (ii)
any unreimbursed and accrued Liquidation Expenses, provided that the exclusion
of any such amounts pursuant to this subsection (g) on a particular Remittance
Date shall not thereby create a claim for an Insured Payment;
(h) the portion of Net Foreclosure Profits representing any
unpaid Servicing Fee; and
(i) All amounts collected with respect to any Mortgage Loan
allocable to the Additional Balance of such Mortgage Loan pursuant to the
definition of "Exchangeable Certificate Allocation" as set forth herein.
"Servicer Remittance Date" shall mean, with respect to any
Remittance Date, the 14th day of the month in which such Remittance Date occurs,
or if such day is not a Business Day, the first Business Day preceding such 14th
day.
"Servicer Account" shall mean the account created and maintained
pursuant to Section 5.7.
"Servicing Advances" shall mean all reasonable and customary
"out-of-pocket" costs and expenses incurred in the performance by the Servicer
of its servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement proceedings, including foreclosures, (c) expenditures relating to
the purchase or maintenance of a first or second lien not included in the Trust
Fund on the Mortgaged Property, (d) the management and liquidation of the REO
Property, including reasonable fees paid to any independent contractor in
connection therewith, (e) compliance with the obligations (including
indemnification obligations) under Sections 5.2 (limited solely to the
reasonable and customary out-of-pocket expenses of the Subservicer), 5.5, 5.7,
5.9 or 5.10 (as related to Section 9.5), all of which reasonable and customary
out-of-pocket costs and expenses are reimbursable to the Servicer to the extent
provided in Section 5.4(a), 5.10 and 5.19.
"Servicing Compensation" shall mean the Servicing Fee and other
amounts to which the Servicer is entitled pursuant to Section 5.14.
"Servicing Fee" shall mean, as to each Mortgage Loan, the annual
fee payable to the Servicer, which is calculated as an amount equal to the
product of (a) 1.00% per annum, or up to 1.00% in the event that Irwin Home
Equity Corporation is succeeded by the Trustee or any other successor servicer
appointed as herein provided, and (b) the Principal Balance thereof. Such fee
shall be calculated and payable monthly only on amounts actually received in
respect of interest on such Mortgage Loan and shall be computed on the basis of
the same principal amount and for the period respecting which any related
interest payment on a Mortgage Loan is computed. The Servicing Fee includes any
servicing fees owed or payable to any Subservicer.
"Servicing Officer" shall mean any officer of the Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans whose name and specimen signature appear on a list of servicing
officers furnished to the Trustee and the Certificate Insurer by the Servicer,
as such list may from time to time be amended.
"Startup Day" shall mean the day designated as such pursuant to
Section 2.5 hereof.
"Subservicer" shall mean any Person with whom the Servicer has
entered into a Subservicing Agreement and who satisfies the requirements set
forth in Section 5.2(a) hereof in respect of the qualification of a Subservicer.
"Subservicing Agreement" shall mean any agreement between the
Servicer and any Subservicer relating to subservicing and/or administration of
certain Mortgage Loans as provided in Section 5.2(b), a copy of which shall be
delivered, along with any modifications thereto, to the Trustee and the
Certificate Insurer.
"Substitution Adjustment" shall mean, as to any date on which a
substitution occurs pursuant to Section 2.4 or 3.3, the amount (if any) by which
the aggregate principal balances (after application of principal payments
received on or before the date of substitution of any Qualified Substitute
Mortgage Loans as of the date of substitution) are less than the aggregate of
the Trust Balances of the related Deleted Mortgage Loans together with 30 days'
interest thereon at the Mortgage Interest Rate.
"Supplement" shall mean any supplement to this Pooling and
Servicing Agreement, by which the terms and provisions hereof are amended,
supplemented or modified with respect to any Series of Certificates issued out
of the Trust Fund. No Supplement shall provide for any allocation of Collections
that adversely affects the interests of any issued and outstanding Series of
Certificates or the related interest of the Certificate Insurer.
"Tax Matters Person" shall mean the Person or Persons appointed
pursuant to Section 10.15 from time to time to act as the "tax matters person"
(within the meaning of the REMIC Provisions) of a REMIC of the Trust Fund.
"Tax Return" shall mean the federal income tax return on
Internal Revenue Service Form 1066, "U.S. Real Estate Mortgage Investment
Conduit Income Tax Return," including Schedule Q thereto, Quarterly Notice to
Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation, or any
successor forms, to be filed on behalf of the Trust Fund due to its
classification as a REMIC under the REMIC Provisions, together with any and all
other information reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provision of federal, state
or local tax laws.
"Total Expected Losses" shall mean, for any Remittance Date, the
sum of the Liquidated Loan Loss and the Delinquency Calculation Amount.
"Transfer" shall mean any direct or indirect transfer, sale,
pledge, hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
"Transfer Affidavit and Agreement" shall have the meaning as
defined in Section 4.2(i)(ii).
"Transferee" shall mean any Person who is acquiring by Transfer
any Ownership Interest in a Certificate.
"Transferor" shall mean any Person who is disposing by Transfer
any Ownership Interest in a Certificate.
"Trust" shall mean Prudential Securities Secured Financing
Corporation Trust 1995-2, the trust created hereunder.
"Trust Balance" shall mean, with respect to any Mortgage Loan,
(i) its original Trust Balance as shown on the Mortgage Loan Schedule on the
Cut-Off Date minus all payments of or in respect of principal allocated to the
Trust Balance of such Mortgage Loan, or (ii) from and after the date of
substitution of a Qualified Substitute Mortgage Loan for a Deleted Mortgage
Loan, the Principal Balance of the Qualified Substitute Mortgage Loan on the
date of such substitution, as adjusted by any Substitution Adjustment, minus all
payments of or in respect of principal allocated to the Trust Balance of such
Mortgage Loan after the date of substitution. On and after the date upon which
a Mortgage Loan becomes a Liquidated Mortgage Loan, the Trust Balance for such
Mortgage Loan shall equal zero. The Trust Balance for any Additional Mortgage
Loan shall be zero.
"Trustee" shall mean The Chase Manhattan Bank, N.A., or its
successor in interest, or any successor trustee appointed as herein provided.
"Trustee Collection Account" shall mean the Eligible Account
established and maintained by the Trustee for the benefit of the
Certificateholders and the Holders of the Exchangeable Certificates and any
Additional Certificates pursuant to Section 5.3(a) hereof.
"Trustee Fee" shall mean, as to any Remittance Date, the fee
payable to the Trustee in respect of its services as Trustee that accrues at a
monthly rate equal to 1/12 of .005% of the Trust Balance of each Mortgage Loan
as of the immediately preceding Due Date or, with respect to any new Series
issued hereunder, as shall be designated in the Supplement relating thereto.
"Trustee's Mortgage File" shall mean the documents delivered to
the Trustee or its designated agent pursuant to Section 2.3.
"Trustee's Remittance Report" shall have the meaning as defined
in Section 6.7.
"Trust Fund" shall mean (a) each Mortgage Loan and any
Additional Mortgage Loans which may be transferred to the Trust pursuant to the
provisions of Section 6.11 hereof, (b) all rights of the Depositor under the
Purchase and Sale Agreement (and exclusive of any of its obligations), (c) such
assets as from time to time are identified as REO Property and collections
thereon and proceeds thereof, (d) all assets deposited in the Accounts,
including any amounts on deposit in the Collection Account (including the
Collection Account maintained at the Bank of the West), the Trustee Collection
Account, the Exchangeable Certificate Account, the Certificate Account and the
Reserve Account and all amounts in the Accounts invested in Permitted
Investments, (e) the Trustee's rights with respect to the Mortgage Loans under
all insurance policies (other than the Certificate Insurance Policy) required to
be maintained pursuant to this Agreement and any Insurance Proceeds, (f) all
Liquidation Proceeds and (g) all Released Mortgaged Property Proceeds and (h)
all rights against Irwin Union Bank and Trust Company arising under the Mortgage
Loan Sale Agreement and all rights against the Seller arising under the Purchase
and Sale Agreement.
"Underwriter" shall mean Prudential Securities Incorporated.
"Underwriting Guidelines" shall mean the underwriting guidelines
of the Seller and of the Servicer, a copy of which is attached as an exhibit to
the Purchase and Sale Agreement.
"United States Person" shall mean a citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in, or under the laws of, the United States or any political subdivision
thereof, or an estate or trust whose income from sources without the United
States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States.
"Unpaid REO Amortization" shall mean, as to any REO Mortgage
Loan and any month, the aggregate of the installments of principal and accrued
interest (adjusted to the related Net Mortgage Interest Rate) deemed to be due
in such month and in any prior months that remain unpaid, calculated in
accordance with Section 5.12.
"Weighted Average Rate Cap" shall mean, on any Remittance Date,
that maximum interest rate computed to equal one-twelfth the weighted average
Mortgage Loan Rate, net of the rates at which the Servicing Fee, the Trustee's
Fee and the Certificate Insurance Policy Premium Amount are calculated.
Section 1.2 Provisions of General Application. (a) All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
(b) The terms defined in this Article include the plural as
well as the singular.
(c) The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole. All references to
Articles and Sections shall be deemed to refer to Articles and Sections of this
Agreement.
(d) Reference to statutes are to be construed as including
all statutory provisions consolidating, amending or replacing the statute to
which reference is made and all regulations promulgated pursuant to such
statutes.
(e) All calculations of interest (other than with respect to
the Mortgage Loans, or as otherwise specifically set forth herein) provided for
herein shall be made on the basis of actual days elapsed divided by a year
comprised of 360 days. All calculations of interest with respect to any Mortgage
Loan provided for herein shall be made in accordance with the terms of the
related Note and Mortgage or, if such documents do not specify the basis upon
which interest accrues thereon, on the basis of dividing actual days elapsed by
a 360-day year.
(f) Any Mortgage Loan payment is deemed to be received on
the date such payment is actually received by the Servicer; provided, however,
that for purposes of calculating distributions on the Certificates prepayments
with respect to any Mortgage Loan are deemed to be received on the date they are
applied in accordance with customary servicing practices consistent with the
terms of the related Note and Mortgage to reduce the outstanding principal
balance of such Mortgage Loan on which interest accrues.
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ARTICLE II
Establishment of the Trust
Sale and Conveyance of the Trust Fund
Section 2.1 Sale and Conveyance of Trust Fund; Priority and
Subordination of Ownership Interests; Establishment of the Trust. (a) The
Depositor does hereby sell, transfer, assign, set over and convey to the Trust
for the benefit of the Certificateholders, the Additional Certificateholders and
the Holder of the Exchangeable Certificate, as their respective interests may,
from time to time appear and the Certificate Insurer without recourse but
subject to the provisions in this Section 2.1 and the other terms and provisions
of this Agreement, all of the right, title and interest of the Depositor in and
to the Trust Fund, exclusive of the obligations of the Depositor, Seller or any
other party with respect to the Mortgage Loans. In connection with such
transfer and assignment, and pursuant to Section 2.6 of the Purchase and Sale
Agreement, the Depositor does hereby also irrevocably transfer, assign, set over
and otherwise convey to the Trustee all of its rights (exclusive of its
obligations) under the Purchase and Sale Agreement including, without
limitation, its right to exercise the remedies created by Sections 2.5 and 3.4
of the Purchase and Sale Agreement for breaches of representations and
warranties, agreements and covenants of the Seller contained in Sections 3.1 and
3.2 of the Purchase and Sale Agreement.
(b) The rights of the Certificateholders, the Additional
Certificateholders and the Holder of the Exchangeable Certificate to receive
payments with respect to the Mortgage Loans in respect of the Certificates, the
Additional Certificates and the Exchangeable Certificate, and all ownership
interests of the Certificateholders, the Additional Certificateholders and the
Holder of the Exchangeable Certificate in such payments, shall be as set forth
in this Agreement. In this regard, all rights of the Class R Certificateholders
to receive payments in respect of the Class R Certificates, are subject and
subordinate to the preferential rights of the Class A Certificateholders to
receive payments in respect of the Class A Certificates and to the Certificate
Insurer's rights to be reimbursed for Insured Payments together with interest
thereon at the rate specified herein or in the Certificate Insurance Agreement.
In accordance with the foregoing, the ownership interest of the Class R
Certificateholders in amounts deposited in the Certificate Account or the
Reserve Account from time to time shall not vest unless and until such amounts
are distributed in respect of the Class R Certificates in accordance with the
terms of this Agreement.
(c) The Depositor does hereby establish, pursuant to the
further provisions of this Agreement and the laws of the State of New York, an
express trust to be known, for convenience, as "Prudential Securities Secured
Financing Corporation Trust 1995-2" and does hereby appoint The Chase Manhattan
Bank, N.A. as Trustee in accordance with the provisions of this Agreement.
Section 2.2 Possession of Mortgage Files; Access to Mortgage
Files. (a) Upon the issuance of the Certificates, any Additional Certificates
and the Exchangeable Certificate, the ownership of each Mortgage Note, the
Mortgage and the contents of the related Mortgage File related to each Mortgage
Loan is vested in the Trustee for the benefit of the Certificateholders, the
Additional Certificateholders, the Holder of the Exchangeable Certificate and
the Certificate Insurer, as their respective interests may, from time to time,
appear.
(b) Pursuant to Section 2.4 of the Purchase and Sale
Agreement, the Depositor has delivered or caused to be delivered the Trustee's
Mortgage File related to each Mortgage Loan to the Trustee.
(c) The Trustee may enter into a custodial agreement
pursuant to which the Trustee will appoint a custodian (a "Custodian") to hold
the Mortgage Files in trust for the benefit of the Trustee; provided, however,
that the custodian so appointed shall in no event be the Depositor or the
Servicer or any Person known to a Responsible Officer of the Trustee to be an
Affiliate of any of them other than any Affiliate of any of them.
(d) The Custodian shall afford the Depositor, the
Certificate Insurer and the Servicer reasonable access to all records and
documentation regarding the Mortgage Loans relating to this Agreement, such
access being afforded at customary charges, upon reasonable request and during
normal business hours at the offices of the Custodian.
Section 2.3 Delivery of Mortgage Loan Documents. (a) In
connection with each conveyance pursuant to Section 2.1 or 2.2 hereof, the
Depositor has delivered or does hereby agree to deliver or cause to be delivered
to the Trustee the Certificate Insurance Policy and each of the following
documents for each Mortgage Loan sold by the Seller to the Depositor and sold by
the Depositor to the Trust Fund:
(i) The original Mortgage Note, endorsed by the holder of
record without recourse in the following form: "Pay to the order of
, without recourse" and signed in the name of an authorized officer of the
holder of record, the Irwin Union Bank and Trust Company, and if by the Seller,
by an authorized officer;
(ii) The original Mortgage with evidence of recording
indicated thereon; provided, however, that if such Mortgage has not been
returned from the applicable recording office, then such recorded Mortgage shall
be delivered when so returned;
(iii) An assignment of the original Mortgage, in suitable form
for recordation in the jurisdiction in which the related Mortgaged Property is
located, in the name of the holder of record of the Mortgage Loan by an
authorized officer (with evidence of submission for recordation of such
assignment in the appropriate real estate recording office for such Mortgaged
Property to be received by the Trustee within 14 days of the Closing Date);
provided, however, that Assignments of Mortgages shall not be required to be
submitted for recording with respect to any Mortgage Loan which relates to the
Trustee's Mortgage File if the Trustee, each of the Rating Agencies and the
Certificate Insurer shall have received an opinion of counsel satisfactory to
the Trustee, each of the Rating Agencies and the Certificate Insurer stating
that, in such counsel's opinion, the failure to record such Assignment of
Mortgage shall not have a materially adverse effect on the security interest of
the Trustee in the Mortgage; provided, further, that any Assignment of Mortgage
for which an opinion has been delivered shall be recorded upon the earlier to
occur of (i) receipt by the Trustee of the Certificate Insurer's written
direction to record such Mortgage, (ii) the occurrence of any Event of Default,
as such term is defined in this Pooling and Servicing Agreement, or (iii) a
bankruptcy or insolvency proceeding involving the Mortgagor is initiated or
foreclosure proceedings are initiated against the Mortgaged Property as a
consequence of an event of default under the Mortgage Loan; provided, further
that if the related Mortgage has not been returned from the applicable recording
office, then such assignment shall be delivered when so returned (and a blanket
assignment with respect to each unrecorded Mortgage shall be delivered on the
Closing Date);
(iv) Any intervening Assignments of the Mortgage with
evidence of recording thereon;
(v) Any assumption, modification, consolidation or extension
agreements; and
(vi) The policy of title insurance (or a commitment for title
insurance, if the policy is being held by the title insurance company pending
recordation of the Mortgage) and the certificate of primary mortgage guaranty
insurance, if any, issued with respect to such Mortgage Loan, provided, however,
that Mortgage Loans with a Principal Balance under $15,000 which are in a second
lien position and have been submitted for review of title after July 10, 1995
shall be exempt from this requirement.
provided, however, that in the case of any Mortgage Loans which have been
prepaid in full after the Cut-off Date and prior to the date of the execution of
this Agreement, the Depositor, in lieu of delivering the above documents, hereby
delivers to the Trustee a certification of an officer of the Seller of the
nature set forth in Exhibit M attached hereto; and provided further, however,
that as to certain Mortgages or assignments thereof which have been delivered or
are being delivered to recording offices for recording and have not been
returned to the Seller in time to permit their delivery hereunder at the time of
such transfer, in lieu of delivering such original documents, the Depositor is
delivering to the Trustee a true copy thereof with a certification by the Seller
on the face of such copy substantially as follows: "certified true and correct
copy of original which has been transmitted for recordation." The Seller has
agreed pursuant to the Purchase and Sale Agreement, that it will deliver such
original documents, together with any related policy of title insurance not
previously delivered, on behalf of the Depositor to the Trustee promptly after
they are received, and no later than 120 days after the Closing Date provided,
however, that in those instances where the public recording office retains the
original Mortgage or Assignment of Mortgage after it has been recorded or such
original document has been lost by the recording office, the Seller shall be
deemed to have satisfied its obligations hereunder if it shall have delivered to
the Trustee a copy of such original Mortgage or Assignment of Mortgage certified
by the public recording office to be a true copy of the recorded original
thereof. The Seller has agreed pursuant to the Purchase and Sale Agreement, at
its own expense, to record (or to provide the Trustee with evidence of
recordation thereof) each assignment within 14 days of the Closing Date in the
appropriate public office for real property records, provided that such
assignments are redelivered by the Trustee to the Seller upon the Seller's
written request and at the Seller's expense, unless the Seller (at its expense)
furnishes to the Trustee, the Certificate Insurer and the Rating Agencies an
unqualified Opinion of Counsel reasonably acceptable to the Trustee to the
effect that recordation of such assignment is not necessary under applicable
state law to preserve the Trustee's interest in the related Mortgage Loan
against the claim of any subsequent transferee of such Mortgage Loan or any
successor to, or creditor of, the Seller.
On or prior to the Closing Date, or prior to the
applicable date of conveyance, the Servicer, at its own expense shall complete
the endorsement of each Mortgage Note such that the final endorsement appears in
the following form:
"Pay to the order of ____________, without recourse, Irwin Union Bank
and Trust Company."
The Servicer, at its own expense shall also complete
each Assignment of Mortgage such that the final Assignment of Mortgage appears
in the following form:
"The Chase Manhattan Bank, N.A., as Trustee for Prudential Securities
Secured Financing Corporation Trust 1995-2 formed pursuant to the Pooling and
Servicing Agreement dated December 6, 1995, between Prudential Securities
Secured Financing Corporation as Depositor, Irwin Home Equity Corporation as
Servicer and The Chase Manhattan Bank, N.A., as Trustee"
(b) Without diminution of the requirements of Sections
2.2(c) and this Section 2.3, all original documents relating to the Mortgage
Loans that are not delivered to the Trustee are and shall be delivered to the
Servicer by the Seller on behalf of the Depositor pursuant to the Purchase and
Sale Agreement, and shall be held by the Servicer in trust for the benefit of
the Trustee on behalf of the Certificateholders and the Certificate Insurer. In
the event that any such original document is required pursuant to the terms of
this Section 2.3 to be a part of a Mortgage File, the Servicer shall promptly
deliver such original document to the Trustee. In acting as custodian of any
such original document, the Servicer agrees further that it does not and will
not have or assert any beneficial ownership interest in the Mortgage Loans or
the Mortgage Files. Promptly upon the Depositor's and the Trust's acquisition
thereof and the Servicer's receipt thereof, the Servicer on behalf of the Trust
shall mark conspicuously each original document not delivered to the Trustee,
and the Seller's master data processing records evidencing each Mortgage Loan
with a legend, acceptable to the Trustee, evidencing that the Trust has
purchased the Mortgage Loans and all right and title thereto and interest
therein pursuant to the Purchase and Sale Agreement and this Agreement.
(c) In the event that any Mortgage Note required to be
delivered pursuant to this Section 2.3 is conclusively determined by any of the
Seller, the Servicer, the Custodian or the Trustee to be lost, stolen or
destroyed the Seller shall, within 14 days of the Closing Date, deliver to the
Trustee a "lost note affidavit" in form and substance acceptable to the Trustee,
and shall simultaneously therewith request the obligor on such Mortgage Note to
execute and return a replacement Mortgage Note, and shall further agree to hold
the Trustee and the Certificate Insurer harmless from any loss or damage
resulting from any action taken in reliance on the delivery and possession by
the Trustee of such lost note affidavit. Upon the receipt of such replacement
Mortgage Note, the Trustee shall return the lost note affidavit. Delivery by
the Seller of such lost note affidavit shall not affect the obligations of the
Seller under the Purchase and Sale Agreement or Irwin Union Bank and Trust
Company under the Mortgage Loan Sale Agreement with respect to the related
Mortgage Loan
Section 2.4 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee. (a) The Trustee agrees to execute and
deliver to the Depositor, the Certificate Insurer, the Servicer and the Seller
on or prior to the Closing Date an acknowledgment of receipt of the related
Certificate Insurance Policy and, with respect to each Mortgage Loan, the
original Mortgage Note (with any exceptions noted), in the form attached as
Exhibit E hereto and declares that it will hold such documents and any
amendments, replacements or supplements thereto, as well as any other assets
included in the definition of Trust Fund and delivered to the Trustee, as
Trustee in trust upon and subject to the conditions set forth herein for the
benefit of the Certificateholders and the Certificate Insurer. The Trustee
agrees, for the benefit of the Certificateholders and the Certificate Insurer,
to review (or cause to be reviewed) each Trustee's Mortgage File within 45
Business Days after the Closing Date (with respect to the Mortgage Loans) and to
deliver to the Seller, the Servicer, the Depositor and the Certificate Insurer a
certification in the form attached hereto as Exhibit F to the effect that, as to
each Mortgage Loan listed in the related Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in such
certification as not covered by such certification), (i) all documents required
to be delivered to it pursuant to Section 2.3 hereof and the Purchase and Sale
Agreement are in its possession, (ii) each such document has been reviewed by
it, has been, to the extent required, executed and has not been mutilated,
damaged, torn or otherwise physically altered (handwritten additions, changes or
corrections shall not constitute physical alteration if initialled by the
Mortgagor), appears regular on its face and relates to such Mortgage Loan. The
Trustee shall be under no duty or obligation to inspect, review or examine any
such documents, instruments, certificates or other papers to determine that they
are genuine, enforceable, or appropriate for the represented purpose or that
they are other than what they purport to be on their face.
On or prior to the first anniversary of the Closing Date, the
Trustee shall deliver (or cause to be delivered) to the Servicer, the Seller,
the Depositor and the Certificate Insurer a final certification in the form
attached hereto as Exhibit G to the effect that, as to each Mortgage Loan listed
in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in such certification as not covered by
such certification), and as to any document noted in an exception included in
the Trustee's initial certification, (i) all documents required to be delivered
to it pursuant to Section 2.3 hereof and the Purchase and Sale Agreement are in
its possession, (ii) each such document has been reviewed by it, has been, to
the extent required, executed and has not been mutilated, damaged, torn or
otherwise physically altered (handwritten additions, changes or corrections
shall not constitute physical alteration if initialled by the Mortgagor),
appears regular on its face and relates to such Mortgage Loan.
(b) If the Certificate Insurer or the Trustee during the
process of reviewing the Trustee's Mortgage Files finds any document
constituting a part of a Trustee's Mortgage File which is not executed, has not
been received, is unrelated to the Mortgage Loan identified in the related
Mortgage Loan Schedule, or does not conform to the requirements of Section 2.3
or the description thereof as set forth in the related Mortgage Loan Schedule,
the Trustee or the Certificate Insurer, as applicable, shall promptly so notify
the Servicer, the Seller, the Certificate Insurer and the Trustee. In
performing any such review, the Trustee may conclusively rely on the Seller as
to the purported genuineness of any such document and any signature thereon. It
is understood that the scope of the Trustee's review of the Mortgage Files is
limited solely to confirming that the documents listed in Section 2.3 have been
executed and received and relate to the Mortgage Files identified in the related
Mortgage Loan Schedule. Pursuant to the Purchase and Sale Agreement, the Seller
has agreed to use reasonable efforts to cause to be remedied a material defect
in a document constituting part of a Mortgage File of which it is so notified by
the Trustee. If, however, within 60 days after the Trustee's notice to it
respecting such defect the Seller has not caused to be remedied the defect and
the defect materially and adversely affects the interest of the
Certificateholders in the related Mortgage Loan or the interests of the
Certificate Insurer, the Trustee shall enforce the Seller's obligation pursuant
to the Purchase and Sale Agreement to either (i) substitute in lieu of such
Mortgage Loan a Qualified Substitute Mortgage Loan in the manner and subject to
the conditions set forth in Section 3.3 hereof or (ii) purchase such Mortgage
Loan at a purchase price equal to the outstanding Principal Balance of such
Mortgage Loan as of the date of purchase, plus the greater of (x) all accrued
and unpaid interest thereon and (y) 30 days' interest thereon, computed at the
related Mortgage Interest Rate, net of the Servicing Fee, if the Seller is the
Servicer, plus the amount of any unreimbursed Servicing Advances made by the
Servicer with respect to such Mortgage Loan, which purchase price shall be
deposited in the Trustee Collection Account prior to the next succeeding
Servicer Remittance Date, after deducting therefrom any amounts received in
respect of such repurchased Mortgage Loan or Loans and being held in the
Collection Account or Trustee Collection Account for future distribution to the
extent such amounts have not yet been applied to principal or interest on such
Mortgage Loan (the "Loan Repurchase Price"); provided, however, that the Seller
may not, pursuant to clause (ii) preceding, purchase the Principal Balance of
any Mortgage Loan that is not in default or as to which no default is imminent
unless the Seller has theretofore delivered an Opinion of Counsel knowledgeable
in federal income tax matters which states that such a purchase would not
constitute a prohibited transaction under the Code.
(c) Upon receipt by the Trustee of a certification of a
Servicing Officer of such substitution or purchase and, in the case of a
substitution, upon receipt of the related Trustee's Mortgage File, and the
deposit of the amounts described above into the Trustee Collection Account
(which certification shall be in the form of Exhibit H hereto), the Trustee
shall release to the Servicer for release to the Seller the related Trustee's
Mortgage File and shall execute, without recourse, and deliver such instruments
of transfer furnished by the Seller as may be necessary to transfer such
Mortgage Loan to the Seller. The Trustee shall notify the Certificate Insurer
if the Seller fails to repurchase or substitute for a Mortgage Loan in
accordance with the foregoing.
Section 2.5 Designations under REMIC Provisions; Designation of
Startup Day. (a) The Class A Certificates are hereby designated as the
"regular interests", and the Class R Certificates are designated the single
class of "residual interests" in the REMIC 1995-2 for the purposes of the REMIC
Provisions.
(b) The Closing Date will be the "startup day" of the REMIC
1995-2 within the meaning of Section 860G(a)(9) of the Code.
Section 2.6 Execution of Certificates. The Trustee
acknowledges the assignment to it of the Mortgage Loans and the delivery to it
of the Trustee's Mortgage Files relating thereto and, concurrently with such
delivery, has executed, authenticated and delivered to or upon the order of the
Depositor, in exchange for the Mortgage Loans, the Trustee's Mortgage Files and
the other assets included in the definition of Trust Fund, Certificates and the
Exchangeable Certificate duly authenticated by the Trustee, and, in the case of
the Class A Certificates, in Authorized Denominations, evidencing the entire
beneficial ownership interest in the Trust Fund.
Section 2.7 Application of Principal and Interest. In the
event that Net Liquidation Proceeds on a Liquidated Mortgage Loan are less than
the outstanding Principal Balance of the related Mortgage Loan plus accrued
interest thereon, or any Mortgagor makes a partial payment of any Monthly
Payment due on a Mortgage Loan, such Net Liquidation Proceeds or partial payment
shall be applied to payment of the related Mortgage Note as provided therein,
and if not so provided, first to interest accrued at the Mortgage Interest Rate,
then to the principal owed on such Mortgage Loan.
Section 2.8 Grant of Security Interest. cha Except with
respect to the REMIC Provisions, it is the intention of the parties hereto that
the conveyance by the Depositor of the Trust Fund to the Trustee on behalf of
the Trust shall constitute a purchase and sale of such Trust Fund and not a
loan. In the event, however, that a court of competent jurisdiction were to
hold that the transaction evidenced hereby constitutes a loan and not a purchase
and sale, it is the intention of the parties hereto that this Agreement shall
constitute a security agreement under applicable law, and that the Depositor
shall be deemed to have granted and hereby grants to the Trustee, on behalf of
the Trust, a first priority perfected security interest in all of the
Depositor's right, title and interest in, to and under the Trust Fund to secure
a loan in an amount equal to the purchase price of the Mortgage Loans. The
conveyance by the Depositor of the Trust Fund to the Trustee on behalf of the
Trust shall not constitute and are not intended to result in an assumption by
the Trustee, the Certificate Insurer or any Certificateholder or the Holder of
the Exchangeable Certificate of any obligation of the Seller or any other Person
in connection with the Trust Fund, including, but not limited to the obligation
to advance additional amounts pursuant to the terms of the Mortgage Note.
(b) The Depositor and the Servicer shall take no action
inconsistent with the Trust's ownership of the Trust Fund and shall indicate or
shall cause to be indicated in its records and records held on its behalf that
ownership of each Mortgage Loan and the assets in the Trust Fund are held by the
Trustee on behalf of the Trust. In addition, the Depositor and the Servicer
shall respond to any inquiries from third parties with respect to ownership of a
Mortgage Loan or any other asset in the Trust Fund by stating that it is not the
owner of such asset and that ownership of such Mortgage Loan or other Trust Fund
asset is held by the Trustee on behalf of the Trust.
Section 2.9 Further Assurances; Powers of Attorney. (a) The
Servicer agrees that, from time to time, at its expense, it shall cause the
Seller (and the Depositor also agrees that it shall), promptly to execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or appropriate, or that the Servicer or the Trustee may
reasonably request, in order to perfect, protect or more fully evidence the
transfer of ownership of the Trust Fund or to enable the Trustee to exercise or
enforce any of its rights hereunder. Without limiting the generality of the
foregoing, the Servicer and the Depositor will, upon the request of the Servicer
or of the Trustee execute and file (or cause to be executed and filed) such real
estate filings, financing or continuation statements, or amendments thereto or
assignments thereof, and such other instruments or notices, as may be necessary
or appropriate.
(b) The Depositor hereby grants to the Servicer and the
Trustee powers of attorney to execute all documents on its behalf under this
Agreement and the Purchase and Sale Agreement as may be necessary or desirable
to effectuate the foregoing.
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ARTICLE III
Representations and Warranties
Section 3.1 Representations of the Servicer. The Servicer
hereby represents and warrants to the Trustee, the Depositor, the Certificate
Insurer and the Certificateholders as of the Closing Date and during the term of
this Agreement:
(a) The Servicer is a duly organized corporation, validly
existing and in good standing under the laws of the state of its incorporation
and has all licenses necessary to carry on its business as now being conducted
and is licensed, qualified and in good standing in each Mortgaged Property State
if the laws of such state require licensing or qualification in order to conduct
business of the type conducted by the Servicer, and in any event the Servicer is
in compliance with the laws of any such state to the extent necessary to ensure
the enforceability of the related Mortgage Loan and the servicing of such
Mortgage Loan in accordance with the terms of this Agreement; the Servicer has
the full corporate power and authority to execute and deliver this Agreement and
to perform in accordance herewith; the execution, delivery and performance of
this Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Servicer and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement
evidences the valid, binding and enforceable obligation of the Servicer; and all
requisite corporate action has been taken by the Servicer to make this Agreement
valid and binding upon the Servicer in accordance with its terms;
(b) The consummation of the transactions contemplated by
this Agreement are in the ordinary course of business of the Servicer;
(c) Neither the execution and delivery of this Agreement,
nor the performance of or compliance with the terms and conditions of this
Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Servicer's charter or by-laws or any legal
restriction or any agreement or instrument to which the Servicer is now a party
or by which it is bound, or constitute a default or result in an acceleration
under any of the foregoing, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Servicer or its property is
subject, or impair the ability of the Trustee (or the Servicer as the agent of
the Trustee) to realize on the Mortgage Loans, or impair the value of the
Mortgage Loans;
(d) [Reserved];
(e) The Servicer does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(f) Except as previously disclosed to the Depositor, the
Trustee and the Certificate Insurer, there is no action, suit, proceeding or
investigation pending or, to the knowledge of the Servicer, threatened against
the Servicer which, either in any one instance or in the aggregate, may result
in any material adverse change in the business, operations, financial condition,
properties or assets of the Servicer, or in any material impairment of the right
or ability of the Servicer to carry on its business substantially as now
conducted, or in any material liability on the part of the Servicer, or which
would draw into question the validity of this Agreement or the Mortgage Loans or
of any action taken or to be taken in connection with the obligations of the
Servicer contemplated herein, or which would materially impair the ability of
the Servicer to perform under the terms of this Agreement;
(g) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery and
performance by the Servicer of or compliance by the Servicer with this Agreement
or the sale of the Mortgage Loans to the Depositor in accordance with the
Purchase and Sale Agreement, or the consummation of the transactions
contemplated by this Agreement, except for those consents, approvals or
authorization which have been obtained prior to the Closing Date;
(h) Neither this Agreement nor any statement, report or
other document furnished by the Servicer pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any untrue
statement of fact regarding the Servicer or omits to state a fact necessary to
make the statements regarding the Servicer contained herein or therein not
misleading;
(i) The Servicer has delivered to the Depositor unaudited
financial statements as to its last complete fiscal year and any quarter
subsequent thereto ended more than 60 days prior to the execution of this
Agreement. All such financial statements fairly present the pertinent results
of operations and changes in financial position at the end of each such period
of the Servicer and its subsidiaries and have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied
throughout the periods involved, except as set forth in the notes thereto.
There has been no change in the business, operations, financial condition,
properties or assets of the Servicer since the date of the Servicer's financial
statements that would have a material adverse effect on its ability to perform
its obligations under this Agreement; and
It is understood and agreed that the representations, warranties and covenants
set forth in this Section 3.1 shall survive the delivery of the respective
Mortgage Files to the Trustee or to a custodian, as the case may be, and inure
to the benefit of the Trustee.
Section 3.2 Representations, Warranties and Covenants of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Trustee that as of the date of this Agreement or as of such date specifically
provided herein:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) The Depositor has the corporate power and authority to
convey the Mortgage Loans and to execute, deliver and perform, and to enter into
and consummate transactions contemplated by, this Agreement;
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Depositor, all requisite corporate action having
been taken, and, assuming the due authorization, execution and delivery hereof
by the Servicer and the Trustee, constitutes or will constitute the legal, valid
and binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of, or
registration or filing with, or notice to, any governmental authority or court
is required for the execution, delivery and performance of or compliance by the
Depositor with this Agreement or the consummation by the Depositor of any of the
transactions contemplated hereby, except as have been received or obtained on or
prior to the Closing Date;
(e) None of the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (A) the charter or bylaws of the Depositor, or (B) of any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound; (ii)
results or will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Depositor of any court or governmental
authority having jurisdiction over the Depositor or its subsidiaries; or (iii)
results in the creation or imposition of any lien, charge or encumbrance which
would have a material adverse effect upon the Mortgage Loans or any documents or
instruments evidencing or securing the Mortgage Loans;
(f) There are no actions, suits or proceedings before or
against or investigations of, the Depositor pending, or to the knowledge of the
Depositor, threatened, before any court, administrative agency or other
tribunal, and no notice of any such action, which, in the Depositor's reasonable
judgment, might materially and adversely affect the performance by the Depositor
of its obligations under this Agreement, or the validity or enforceability of
this Agreement; and
(g) The Depositor is not in default with respect to any
order or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency that would materially and adversely
affect its performance hereunder.
It is understood and agreed that the representations, warranties and covenants
set forth in this Section 3.2 shall survive delivery of the respective Mortgage
Files to the Trustee or to a custodian, as the case may be, and shall inure to
the benefit of the Trustee.
Section 3.3 Purchase and Substitution. (a) It is understood
and agreed that the representations and warranties set forth in Sections 3.1 and
3.2 of the Purchase and Sale Agreement shall survive delivery of the
Certificates to the Certificateholders. Pursuant to the Purchase and Sale
Agreement, with respect to any representation or warranty contained in Sections
3.1 or 3.2 of the Purchase and Sale Agreement that is made to the best of the
Seller's knowledge, if it is discovered by the Servicer, any Subservicer, the
Trustee, the Certificate Insurer or any Certificateholder that the substance of
such representation and warranty was inaccurate as of the Closing Date and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan, then notwithstanding the Seller's lack of knowledge with respect to the
inaccuracy at the time the representation or warranty was made, such inaccuracy
shall be deemed a breach of the applicable representation or warranty. Upon
discovery by the Seller, the Servicer, any Subservicer, the Trustee or the
Certificate Insurer of a breach of any of such representations and warranties
which materially and adversely affects the value of the Mortgage Loans or the
interest of the Certificateholders, or which materially and adversely affects
the interests of the Certificate Insurer or the Certificateholders in the
related Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan (notwithstanding that such representation and warranty
was made to the Seller's best knowledge), the party discovering such breach
shall give prompt written notice to the others. Subject to the last paragraph
of this Section 3.3, within 60 days of the earlier of its discovery or its
receipt of notice of any breach of a representation or warranty, pursuant to the
Purchase and Sale Agreement, the Seller shall be required to (i) promptly cure
such breach in all material respects, (ii) purchase such Mortgage Loan on the
next succeeding Servicer Remittance Date, in the manner and at the price
specified in Section 2.4(b), (iii) remove such Mortgage Loan from the Trust Fund
(in which case the Mortgage Loan shall become a Deleted Mortgage Loan) and
substitute one or more Qualified Substitute Mortgage Loans; provided, that, such
substitution is effected not later than the date which is two years after the
Startup Day or at such later date, if the Trustee and the Certificate Insurer
receive an Opinion of Counsel to the effect that such substitution will not
constitute a prohibited transaction for the purposes of the REMIC provisions of
the Code or cause the REMIC 1995-2 to fail to qualify as a REMIC at any time any
certificates are outstanding. Pursuant to the Purchase and Sale Agreement, any
such substitution shall be accompanied by payment by the Seller of the
Substitution Adjustment, if any, to the Servicer to be deposited in the Trustee
Collection Account.
(b) As to any Deleted Mortgage Loan for which the Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, the Seller shall be
required pursuant to the Purchase and Sale Agreement to effect such substitution
by delivering to the Trustee a certification in the form attached hereto as
Exhibit H, executed by a Servicing Officer and the documents described in
Sections 2.3(a)(i)-(vi) for such Qualified Substitute Mortgage Loan or Loans.
(c) The Servicer shall deposit in the Collection Account all
payments received in connection with such Qualified Substitute Mortgage Loan or
Loans after the date of such substitution. Monthly Payments received with
respect to Qualified Substitute Mortgage Loans on or before the date of
substitution will be retained by the Seller. The Trust Fund will own all
payments received on the Deleted Mortgage Loan on or before the date of
substitution, and the Seller shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Mortgage Loan. The Servicer
shall give written notice to the Trustee and the Certificate Insurer that such
substitution has taken place and shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage Loan. Upon
such substitution, such Qualified Substitute Mortgage Loan or Loans shall be
subject to the terms of this Agreement in all respects.
(d) It is understood and agreed that the obligations of the
Seller set forth in Sections 2.5 and 3.4 of the Purchase and Sale Agreement to
cure, purchase or substitute for a defective Mortgage Loan as provided in such
Sections 2.5 and 3.4 constitute the sole remedies of the Trustee, the
Certificate Insurer and the Certificateholders with respect to a breach of the
representations and warranties of the Seller set forth in Sections 3.1 and 3.2
of the Purchase and Sale Agreement. The Trustee shall give prompt written
notice to the Certificate Insurer, Moody's and S&P of any repurchase or
substitution made pursuant to this Section 3.3 or Section 2.4(b) hereof.
(e) Upon discovery by the Servicer, the Trustee, the
Certificate Insurer or any Certificateholder that any Mortgage Loan does not
constitute a Qualified Mortgage, the party discovering such fact shall promptly
(and in any event within 5 days of the discovery) give written notice thereof to
the other parties. In connection therewith, pursuant to the Purchase and Sale
Agreement, the Seller shall be required to repurchase or substitute a Qualified
Substitute Mortgage Loan for the affected Mortgage Loan within 60 days of the
earlier of such discovery by any of the foregoing parties, or the Trustee's or
the Seller's receipt of notice, in the same manner as it would a Mortgage Loan
for a breach of representation or warranty contained in Section 3.1 or 3.2 of
the Purchase and Sale Agreement. The Trustee shall reconvey to the Seller the
Mortgage Loan to be released pursuant hereto in the same manner, and on the same
terms and conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Section 3.1 or 3.2 of the Purchase and
Sale Agreement.
Section 3.4 Servicer Covenants The Servicer hereby
covenants to the Trustee, the Depositor and the Certificate Insurer and the
Certificateholders that as of the Closing Date and during the term of this
Agreement:
(a) The Servicer shall deliver on the Closing Date an
opinion from the general counsel or the corporate counsel of the Servicer as to
general corporate matters in form and substance reasonably satisfactory to
Underwriter's counsel and counsel to the Certificate Insurer.
(b) The Servicer may in its discretion (i) waive any
prepayment charge, assumption fee, late payment charge or other charge in
connection with a Mortgage Loan, and (ii) arrange a schedule, running for no
more than 180 days after the Due Date for payment of any installment on any
Mortgage Note, for the liquidation of delinquent items; provided, that the
Servicer shall not agree to the modification or waiver of any provision of a
Mortgage Loan at a time when such Mortgage Loan is not in default or such
default is not imminent, if such modification or waiver would be treated as a
taxable exchange under Code Section 1001, unless such exchange would not be
considered a "prohibited transaction" under the REMIC Provisions.
It is understood and agreed that the covenants set forth in this Section 3.4
shall survive the delivery of the respective Mortgage Files to the Trustee or to
a custodian, as the case may be, and inure to the benefit of the Trustee.
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ARTICLE IV
The Certificates
Section 4.1 The Certificates. The Certificates and the
Exchangeable Certificate shall be substantially in the forms annexed hereto as,
in the case of the Class A Certificate, Exhibit B-1, in the case of the Class R
Certificate, Exhibit B-2 and in the case of the Exchangeable Certificate,
Exhibit B-3. All Certificates and the Exchangeable Certificate shall be
executed by manual or facsimile signature on behalf of the Trustee by an
authorized officer and authenticated by the manual or facsimile signature of an
authorized officer. Any Certificates and any Exchangeable Certificate bearing
the signatures of individuals who were at the time of the execution thereof the
authorized officers of the Trustee shall bind the Trustee, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
delivery of such Certificates or Exchangeable Certificates or did not hold such
offices at the date of such Certificates. All Certificates, the Exchangeable
Certificate and Other Certificates issued hereunder shall be dated the date of
their authentication.
Section 4.2 Registration of Transfer and Exchange of
Certificates. (a) The Trustee, as registrar, shall cause to be kept a register
(the "Certificate Register") in which, subject to such reasonable regulations as
it may prescribe, the Trustee shall provide for the registration of
Certificates, the Exchangeable Certificate and any Other Certificates and the
registration of transfer of Certificates, the Exchangeable Certificate and any
Other Certificates. The Trustee is hereby appointed registrar for the purpose
of registering and transferring Certificates, the Exchangeable Certificate and
any Other Certificates, as herein provided. The Certificate Insurer and the
Servicer shall be entitled to inspect and copy the Certificate Register and the
records of the Trustee relating to the Certificates, the Exchangeable
Certificate and any Other Certificates during normal business hours upon
reasonable notice.
(b) Unless otherwise provided in any applicable Supplement,
all Certificates, the Exchangeable Certificate and any Other Certificates issued
upon any registration of transfer or exchange of Certificates, the Exchangeable
Certificate or any Other Certificates shall be valid evidence of the same
ownership interests in the Trust and entitled to the same benefits under this
Agreement as the Certificates, the Exchangeable Certificate and any Other
Certificates surrendered upon such registration of transfer or exchange.
(c) Every Certificate, Exchangeable Certificate and Other
Certificates presented or surrendered for registration of transfer or exchange
shall be duly endorsed, or be accompanied by a written instrument of transfer in
form satisfactory to the Trustee duly executed by the Holder or holder thereof
or his attorney duly authorized in writing. Every Certificate issued in
definitive form shall include a statement of insurance provided by the
Certificate Insurer.
(d) No service charge shall be made to a Holder or holder
for any registration of transfer or exchange of Certificates, the Exchangeable
Certificate and Other Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Certificates, the
Exchangeable Certificate and Other Certificates; any other expenses in
connection with such transfer or exchange shall be an expense of the Trust.
(e) It is intended that the Class A Certificates be
registered so as to participate in a global book-entry system with the
Depository, as set forth herein. The Class A Certificates shall, except as
otherwise provided in the next paragraph, be initially issued in the form of a
single fully registered Class A Certificate with a denomination equal to the
Original Class A Principal Balance. Upon initial issuance, the ownership of
each such Class A Certificate shall be registered in the Certificate Register in
the name of Cede & Co., or any successor thereto, as nominee for the Depository.
The Depositor and the Trustee are hereby authorized to execute and deliver the
Representation Letter with the Depository. With respect to Class A Certificates
registered in the Certificate Register in the name of Cede & Co., as nominee of
the Depository, the Depositor, the Seller, the Servicer, the Trustee and the
Certificate Insurer shall have no responsibility or obligation to Direct or
Indirect Participants or beneficial owners for which the Depository holds Class
A Certificates from time to time as a Depository. Without limiting the
immediately preceding sentence, the Depositor, the Seller, the Servicer, the
Trustee and the Certificate Insurer shall have no responsibility or obligation
with respect to (i) the accuracy of the records of the Depository, Cede & Co.,
or any Direct or Indirect Participant with respect to any Ownership Interest,
(ii) the delivery to any Direct or Indirect Participant or any other Person,
other than a Certificateholder, of any notice with respect to the Class A
Certificates or (iii) the payment to any Direct or Indirect Participant or any
other Person, other than a Certificateholder, of any amount with respect to any
distribution of principal or interest on the Class A Certificates. No Person
other than a Certificateholder shall receive a certificate evidencing such Class
A Certificate. Upon delivery by the Depository to the Trustee of written notice
to the effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of interest by the mailing of checks or drafts to the Certificateholders
appearing as Certificateholders at the close of business on a Record Date, the
name "Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(f) In the event that (i) the Depository or the Servicer
advises the Trustee in writing that the Depository is no longer willing or able
to discharge properly its responsibilities as nominee and depository with
respect to the Class A Certificates and the Servicer or the Depository is unable
to locate a qualified successor or (ii) the Trustee at its sole option elects to
terminate the book-entry system through the Depository, the Class A Certificates
shall no longer be restricted to being registered in the Certificate Register in
the name of Cede & Co. (or a successor nominee) as nominee of the Depository.
At that time, the Servicer may determine that the Class A Certificates shall be
registered in the name of and deposited with a successor depository operating a
global book-entry system, as may be acceptable to the Servicer, or such
depository's agent or designee but, if the Servicer does not select such
alternative global book-entry system, then the Class A Certificates may be
registered in whatever name or names Certificateholders transferring Class A
Certificates shall designate, in accordance with the provisions hereof;
provided, however, that any such reregistration shall be at the expense of the
Servicer.
(g) Notwithstanding any other provision of this Agreement to
the contrary, so long as any Class A Certificate is registered in the name of
Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Class A Certificates as the case may be and all notices with
respect to such Class A Certificates as the case may be shall be made and given,
respectively, in the manner provided in the Representation Letter.
(h) No transfer, sale, pledge or other disposition of any
Class R Certificate shall be made unless such disposition is made pursuant to an
effective registration statement under the Securities Act of 1933, as amended
and effective registration or qualification under applicable state securities
laws or "Blue Sky" laws, or is made in a transaction that does not require such
registration or qualification. None of the Servicer, the Depositor, the Seller
or the Trustee is obligated under this Agreement to register the Certificates
under the Securities Act of 1933, as amended or any other securities law or to
take any action not otherwise required under this Agreement to permit the
transfer of the Class R Certificates without such registration or qualification.
Any such Certificateholder desiring to effect such transfer shall, and does
hereby agree to, indemnify the Trustee, the Depositor, the Seller, the Servicer
and the Certificate Insurer against any liability that may result if the
transfer is not exempt or is not made in accordance with such applicable federal
and state laws. Promptly after receipt by an indemnified party under this
paragraph of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this paragraph, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this paragraph. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to appoint counsel
reasonably satisfactory to such indemnified party to represent the indemnified
party in such action; provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to defend such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
appoint counsel to defend such action and approval by the indemnified party of
such counsel, the indemnifying party will not be liable to such indemnified
party under this paragraph for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso of the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel for any indemnified party), (ii) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party. Under no
circumstances shall the indemnified party enter into a settlement agreement with
respect to any lawsuit, claim or other proceeding without the prior written
consent of the indemnifying party.
(i) Each Person who has or who acquires any Ownership
Interest in a Class R Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably appointed the Servicer or its
designee as its attorney-in-fact to negotiate the terms of any mandatory sale
under subclause (vii) below and to execute all instruments of transfer and to do
all other things necessary in connection with any such sale, and the rights of
each Person acquiring any Ownership Interest in a Class R Certificate are
expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Class
R Certificate shall be a Permitted Transferee and a United States Person and
shall promptly notify the Trustee of any change or impending change in its
status as either a United States Person or a Permitted Transferee.
(ii) In connection with any proposed Transfer of any Ownership Interest
in a Class R Certificate, the Trustee shall require delivery to it, and shall
not register the Transfer of any Class R Certificate until its receipt of, an
affidavit and agreement (a "Transfer Affidavit and Agreement") attached hereto
as Exhibit I from the proposed Transferee, representing and warranting, among
other things, that such Transferee is a Permitted Transferee, that it is not
acquiring its Ownership Interest in the Class R Certificate that is the subject
of the proposed Transfer as a nominee, trustee or agent for any Person that is
not a Permitted Transferee, that for so long as it retains its Ownership
Interest in a Class R Certificate, it will endeavor to remain a Permitted
Transferee, and that it has reviewed the provisions of this Section 4.2(i) and
agrees to be bound by them.
(iii) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (ii) above, if the Trustee has
actual knowledge that the proposed Transferee is not a Permitted Transferee, no
Transfer of an Ownership Interest in a Class R Certificate to such proposed
Transferee shall be effected.
(iv) Each Person holding or acquiring any Ownership Interest in a Class
R Certificate shall agree (x) to require a Transfer Affidavit and Agreement from
any other Person to whom such Person attempts to transfer its Ownership Interest
in a Class R Certificate and (y) not to transfer its Ownership Interest unless
it provides a certificate (attached hereto as Exhibit J) to the Trustee stating
that, among other things, it has no actual knowledge that such other Person is
not a Permitted Transferee.
(v) Each Person holding or acquiring an Ownership Interest in a Class R
Certificate, by purchasing an Ownership Interest in such Certificate, agrees to
give the Trustee written notice that it is a "pass-through interest holder"
within the meaning of temporary Treasury Regulation Section 1.67-3T(a)(2)(i)(A)
immediately upon acquiring an Ownership Interest in a Class R Certificate, if it
is, or is holding an Ownership Interest in a Class R Certificate on behalf of, a
"pass-through interest holder."
(vi) The Trustee will register the Transfer of any Class R Certificate
only if it shall have received the Transfer Affidavit and Agreement. In
addition, no Transfer of a Class R Certificate shall be made unless the Trustee
shall have received a representation letter, the form of which is attached
hereto as Exhibit N from the Transferee of such Certificate to the effect that
such Transferee is a United States Person and is not a "disqualified
organization" (as defined in Section 860E(e)(5) of the Code).
(vii) Any attempted or purported transfer of any Ownership Interest in
a Class R Certificate in violation of the provisions of this Section 4.2 shall
be absolutely null and void and shall vest no rights in the purported
transferee. If any purported transferee shall become a Holder of a Class R
Certificate in violation of the provisions of this Section 4.2, then the last
preceding Permitted Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of transfer of such Class R Certificate.
The Trustee shall notify the Servicer upon receipt of written notice or
discovery by a Responsible Officer that the registration of transfer of a Class
R Certificate was not in fact permitted by this Section 4.2. Knowledge shall not
be imputed to the Trustee with respect to an impermissible transfer in the
absence of such a written notice or discovery by a Responsible Officer. The
Trustee 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
4.2 or for making any payments due on such Certificate to the Holder thereof or
taking any other action with respect to such Holder under the provisions of this
Agreement so long as the transfer was registered after receipt of the related
Transfer Affidavit and Transfer Certificate. The Trustee shall be entitled, but
not obligated to recover from any Holder of a Class R Certificate that was in
fact not a Permitted Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee, all payments
made on such Class R Certificate at and after either such time. Any such
payments so recovered by the Trustee shall be paid and delivered by the Trustee
to the last preceding Holder of such Certificate.
(viii) If any purported transferee shall become a Holder of a Class R
Certificate in violation of the restrictions in this Section 4.2, then the
Servicer or its designee shall have the right, without notice to the Holder or
any prior Holder of such Class R Certificate, to sell such Class R Certificate
to a purchaser selected by the Servicer or its designee on such reasonable terms
as the Servicer or its designee may choose. Such purchaser may be the Servicer
itself or any Affiliate of the Servicer. The proceeds of such sale, net of
commissions, expenses and taxes due, if any, will be remitted by the Servicer to
the last preceding purported transferee of such Class R Certificate, except that
in the event that the Servicer determines that the Holder or any prior Holder of
such Class R Certificate may be liable for any amount due under this Section 4.2
or any other provision of this Agreement, the Servicer may withhold a
corresponding amount from such remittance as security for such claim. The terms
and conditions of any sale under this subclause (vii) shall be determined in the
sole discretion of the Servicer or its designee, and it shall not be liable to
any Person having an Ownership Interest in a Class R Certificate as a result of
its exercise of such discretion.
(ix) The provisions of Section 4.2(i) may be modified, added to or
eliminated, provided that there shall have been delivered to the Trustee and the
Certificate Insurer an Opinion of Counsel to the effect that such modification
of, addition to or elimination of such provisions will not cause the REMIC 1995-
2 to cease to qualify as a REMIC and will not cause (x) the REMIC 1995-2 to be
subject to an entity-level tax caused by the Transfer of any Ownership Interest
in a Class R Certificate to a Person that is not a Permitted Transferee or (y) a
Person other than the prospective transferee to be subject to a REMIC-related
tax caused by the Transfer of an Ownership Interest in a Class R Certificate to
a Person that is not a Permitted Transferee.
(x) No transfer of a Class R Certificate or any interest therein shall
be made to any employee benefit plan or other retirement arrangement, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested, that is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Code (each, a "Plan"), unless
the prospective transferee of such Class R Certificate provides the Servicer and
the Trustee with a certification of facts and, at the prospective transferee's
expense, an Opinion of Counsel which establish to the satisfaction of the
Servicer and the Trustee that such transfer will not result in a violation of
Section 406 of ERISA or Section 4975 of the Code or cause the Servicer or the
Trustee to be deemed a fiduciary of such Plan or result in the imposition of an
excise tax under Section 4975 of the Code. In the absence of their having
received the certification of facts or Opinion of Counsel contemplated by the
preceding sentence, the Trustee and the Servicer shall require the prospective
transferee of any Class R Certificate to certify (in the form of Exhibit K
hereto) that (A) it is neither (i) a Plan nor (ii) a Person who is directly or
indirectly purchasing a Class R Certificate on behalf of, as named fiduciary of,
as trustee of, or with assets, of a Plan and (B) all funds used by such
transferee to purchase such Certificates will be funds held by it in its general
account which it reasonably believes do not constitute "plan assets" of any
Plan.
(xi) Subject to the restrictions set forth in this Agreement, upon
surrender for registration of transfer of any Certificate at the office or
agency of the Trustee located in New York, New York, the Trustee shall execute,
authenticate and deliver in the name of the designated transferee or
transferees, a new Certificate of the same Class and evidencing, in the case of
a Class A Certificate, the same Percentage Interest, and in any other case, the
equivalent undivided beneficial ownership interest in the related REMIC and
dated the date of authentication by the Trustee. At the option of the
Certificateholders, Certificates may be exchanged for other Certificates of
Authorized Denominations of a like aggregate undivided beneficial ownership
interest, upon surrender of the Certificates to be exchanged at such office.
Whenever any Certificates are so surrendered for exchange, the Trustee shall
execute, authenticate and deliver the Certificates which the Certificateholder
making the exchange is entitled to receive. No service charge shall be made for
any transfer or exchange of Certificates, 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. All Certificates
surrendered for transfer and exchange shall be cancelled by the Trustee.
(j) Except as provided in Section 6.11 or in any Supplement, in
no event shall the Exchangeable Certificate or any interest (including any
rights to receive amounts payable to the Servicer hereunder) therein be
transferred, sold, exchanged, pledged, participated or otherwise assigned
hereunder, in whole or in part, except that the Holder of the Exchangeable
Certificate may surrender the Exchangeable Certificate to the Trustee in
exchange for a newly issued Exchangeable Certificate for one or more
Exchangeable Certificates or one or more additional certificates (each, an
"Additional Certificate"), the terms of which shall be defined in a Supplement
to this Agreement (which Supplement shall be subject to Section 10.3 to the
extent that it amends any of the terms of this Agreement), to be delivered to or
upon the order of the Depositor (or the Holder of an Additional Certificate, in
the case of the transfer or exchange thereof, as provided below), upon
satisfaction of the following conditions:
(i) The Depositor shall have given written notice to each Rating Agency
and the Certificate Insurer of such exchange and have confirmed that the
outstanding ratings of any Class of any outstanding Series of Certificates
(considered, in the case of Series 1995-2, without regard to the Certificate
Insurance Policy) shall not be withdrawn or reduced by a result of such
transfer, sale or exchange;
(ii) the Seller shall have caused to be delivered to the Trustee and
each Rating Agency (and the Certificate Insurer) an Opinion of Counsel dated the
date of such exchange with respect thereto that such transfer does not (A)
adversely affect the conclusions reached in any of the federal income tax
opinions dated the applicable closing date issued in connection with the
original issuance of any Series of Certificates, (B) result in a taxable event
to the Holders of any such series or endanger the REMIC status of the REMIC
1995-2 or in the imposition of a tax upon the REMIC 1995-2 or the Trust Fund
(including but not limited to the tax on prohibited transactions as defined in
Section 860F(a)(2) of the Code and the tax on contributions to a REMIC as set
forth in Section 860(G)(d) of the Code (any endangerment or imposition, an
"Adverse REMIC Event")) and (C) following such action the Trust will not be
deemed to be an association (or publicly traded partnership) taxable as a
corporation; and
(iii) the rights of the Additional Certificateholders in and
to the Trust Fund shall at no time exceed those rights allocated on the Closing
Date to the original Holder of the Exchangeable Certificate in and to the Trust
Fund.
Any Additional Certificate may be transferred or exchanged only upon
satisfaction of the conditions set forth in clauses (i) and (ii) above.
(k) Notwithstanding the foregoing, a portion of the
Exchangeable Certificate may be transferred to an Affiliate of the Servicer;
provided that (i) the Seller shall have delivered to the Trustee, each Rating
Agency and the Certificate Insurer, an opinion of counsel substantially similar
to that required in subsection 4.2(j)(ii) above, dated the date of such
transfer, with respect thereto, and (ii) any such transferee shall have
expressly consented to be bound by the terms and provisions of Section 5.22 as
applied to the Servicer (in addition to the Servicer) for purposes of Sections
7.4.
Section 4.3 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee, or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Servicer, the Certificate Insurer
and the Trustee such security or indemnity as may reasonably be required by each
of them to save each of them harmless, then, in the absence of notice to the
Servicer, the Certificate Insurer and the Trustee 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 and representing an
equivalent beneficial ownership interest, but bearing a number not
contemporaneously outstanding. Upon the issuance of any new Certificate under
this Section 4.3, the Servicer and 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 their fees and expenses connected therewith. Any duplicate
Certificate issued pursuant to this Section 4.3 shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the mutilated, destroyed, lost or stolen Certificate shall be
found at any time.
Section 4.4 Persons Deemed Owners. Prior to due presentation
of a Certificate for registration of transfer and subject to the provisions of
Section 4.2 and Article X, the Servicer, the Depositor, the Seller, the
Certificate Insurer and the Trustee may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving remittances pursuant to Section 6.5 and for all other purposes
whatsoever, and the Servicer, the Depositor, the Seller, the Certificate Insurer
and the Trustee shall not be affected by notice to the contrary.
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ARTICLE V
Administration and Servicing of the Mortgage Loans
Section 5.1 Appointment of the Servicer. (a) Irwin Home
Equity Corporation agrees to act as the Servicer and to perform all servicing
duties under this Agreement subject to the terms hereof.
(b) The Servicer shall service and administer the Mortgage
Loans on behalf of the Trustee and the Certificate Insurer and shall have full
power and authority, acting alone or through one or more Subservicers, to do any
and all things in connection with such servicing and administration which it may
deem necessary or desirable. Without limiting the generality of the foregoing,
the Servicer, in its own name or the name of a Subservicer, may, and is hereby
authorized and empowered by the Trustee to, execute and deliver, on behalf of
itself, the Certificateholders and 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, the insurance policies and accounts related thereto and the properties
subject to the Mortgages. Upon the execution and delivery of this Agreement,
and from time to time as may be required thereafter, the Trustee shall furnish
the Servicer or its Subservicers with any powers of attorney and such other
documents as may be necessary or appropriate to enable the Servicer to carry out
its servicing and administrative duties hereunder.
In servicing and administering the Mortgage Loans, the Servicer
shall employ procedures consistent with Accepted Servicing Practices and in a
manner consistent with recovery under any insurance policy required to be
maintained by the Servicer pursuant to this Agreement.
The Servicer shall make Mortgage Interest Rate adjustments on
each Interest Adjustment Date in compliance with applicable regulatory
adjustable mortgage loan requirements and the Mortgage Notes. The Servicer
shall establish procedures to monitor the Interest Adjustment Dates in order to
assure that it uses a published interest rate in determining an interest rate
change, and it will comply with those procedures. In the event a published
interest rate is no longer available, the Servicer shall choose a new comparable
published interest rate in accordance with the provisions hereof, of the
applicable Mortgage Note and of Accepted Servicing Practices, and shall provide
the Mortgagor, the Trustee and the Certificate Insurer with notice of the new
published interest rate sufficient under law and the Mortgage Loan Documents.
The Servicer shall execute and deliver all appropriate notices required by the
applicable adjustable mortgage loan laws and regulations and the Mortgage Loan
Documents regarding such Mortgage Interest Rate adjustments.
If the Servicer fails to make a timely Mortgage Interest Rate
adjustment in accordance with the terms of the related Mortgage Notes, the
Servicer shall use its own funds to satisfy any shortage in the Mortgagor's
remittance so long as such shortage shall continue; any such amount paid by the
Servicer shall be reimbursable to it from any subsequent amounts collected on
account of the related Mortgage Loan with respect to such adjustments.
Costs incurred by the Servicer in effectuating the timely
payment of taxes and assessments on the property securing a Mortgage Note and
foreclosure costs may be added by the Servicer to the amount owing under such
Mortgage Note where the terms of such Mortgage Note so permit; provided,
however, that the addition of any such cost shall not be taken into account for
purposes of calculating the principal amount of the Mortgage Note and the
Mortgage Loan secured by the Mortgage Note or distributions to be made to
Certificateholders. Such costs shall be recoverable by the Servicer pursuant to
Section 5.4. Notwithstanding any other provision of this Agreement, the
Servicer shall at all times service the Mortgage Loans in a manner consistent
with the provisions of Sections 5.1(b) and 5.1(c).
(c) It is intended that the REMIC 1995-2 formed hereunder shall
constitute, and that the affairs of the REMIC 1995-2 shall be conducted so as to
qualify it as, a "real estate mortgage investment conduit" ("REMIC") as defined
in and in accordance with the REMIC Provisions. In furtherance of such
intentions, the Servicer covenants and agrees that it shall not take any action
or omit to take any action reasonably within the Servicer's control and the
scope of its duties more specifically set forth herein that would (i) endanger
the REMIC status of the REMIC 1995-2, or (ii) result in an Adverse REMIC Event.
The Servicer shall not take any action or fail to take any action (whether or
not authorized hereunder) as to which the Trustee has advised it in writing that
it has received an Opinion of Counsel to the effect that an Adverse REMIC Event
could occur with respect to such action, and the Servicer shall have no
liability hereunder for any action taken by it in accordance with the written
instruments of the Trustee. In addition, prior to taking any action with
respect to the Trust Fund that is not expressly permitted under the terms of
this Agreement, the Servicer will consult with the Trustee or its designee and
the Certificate Insurer, in writing, with respect to whether such action could
cause an Adverse REMIC Event to occur. The Trustee may consult with counsel to
make such written advice, and the cost of same shall be borne by the party
seeking to take the action not permitted by this Agreement. At all times as may
be required by the Code, the Servicer shall use its best efforts to ensure that
substantially all of the assets of the Trust will consist of "qualified
mortgages" as defined in Section 860G(a)(3) of the Code and "permitted
investments" as defined in Section 860G(a)(5) of the Code. In the event any
specified time period or other requirement set forth in this Agreement in
respect of compliance with the REMIC Provisions becomes inconsistent with the
REMIC Provisions as the same may be amended, such specified time period or other
requirement shall also be deemed amended to comply with the requirements of this
Section, unless such amended time period or other requirements shall be less
protective of the interests of the Certificateholders and the Certificate
Insurer, in which case, to the extent consistent with the REMIC Provisions, the
former time period or requirement shall continue in force.
(d) Subject to Section 5.12, the Servicer is hereby authorized
and empowered to execute and deliver on behalf of the Trustee and each
Certificateholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties. If
reasonably required by the Servicer, each Certificateholder and the Trustee
shall execute any powers of attorney furnished to the Trustee by the Servicer
and other documents necessary or appropriate to enable the Servicer to carry out
its servicing and administrative duties under this Agreement.
(e) On and after such time as the Trustee receives the
resignation of, or notice of the removal of, the Servicer from its rights and
obligations under this Agreement, and with respect to resignation pursuant to
Section 5.24, after receipt by the Trustee and the Certificate Insurer of the
Opinion of Counsel required pursuant to Section 5.24, the Trustee or its
designee approved by the Certificate Insurer shall assume all of the rights and
obligations of the Servicer, subject to Section 7.2 hereof. The Servicer shall,
upon request of the Trustee but at the expense of the Servicer, deliver to the
Trustee all documents and records relating to the Mortgage Loans and an
accounting of amounts collected and held by the Servicer and otherwise use its
best efforts to effect the orderly and efficient transfer of servicing rights
and obligations to the assuming party.
(f) The Servicer shall deliver a list of Servicing Officers to
the Trustee and the Certificate Insurer by the Closing Date, which list may,
from time to time, be amended, modified or supplemented by the subsequent
delivery to the Trustee and the Certificate Insurer of any superseding list of
Servicing Officers.
Section 5.2 Subservicing Agreements Between the Servicer and
Subservicers. (a) The Servicer may, subject to the prior written approval of
the Certificate Insurer (except as between the Servicer and the Trustee, as
Subservicer), enter into Subservicing Agreements with Subservicers for the
servicing and administration of the Mortgage Loans and for the performance of
any and all other activities of the Servicer hereunder. Each Subservicer shall
be either (i) a depository institution the accounts of which are insured by the
FDIC or (ii) another entity that engages in the business of originating,
acquiring or servicing loans, and in either case shall be authorized to transact
business in the state or states where the related Mortgaged Properties it is to
service are situated. In addition, each Subservicer will obtain and preserve
its qualifications to do business as a foreign corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates and any of the Mortgage Loans
and to perform or cause to be performed its duties under the related
Subservicing Agreement which shall provide that the Subservicer's rights shall
automatically terminate upon the termination, resignation or other removal of
the Servicer under this Agreement. Each account used by any Subservicer for the
deposit of payments on any of the Mortgage Loans shall be an Eligible Account.
(b) Notwithstanding any Subservicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and a Subservicer or reference to actions taken through a Subservicer
or otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee, the Certificate Insurer and the Certificateholders for the servicing
and administering of the Mortgage Loans in accordance with the provisions of
this Agreement without diminution of such obligation or liability by virtue of
such Subservicing Agreements or arrangements or by virtue of indemnification
from the Subservicer and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing and administering the
Mortgage Loans. For purposes of this Agreement, the Servicer shall be deemed to
have received payments on Mortgage Loans when the Subservicer has received such
payments.
In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Trustee or its
designee may, with the prior written consent of the Certificate Insurer, or
shall, at the direction of the Certificate Insurer, either (i) assume all of the
rights and obligations of the Servicer under each Subservicing Agreement that
the Servicer may have entered into or (ii) notwithstanding anything to the
contrary contained in each such Subservicing Agreement, terminate the related
Subservicer without being required to pay any fee in connection therewith.
Section 5.3 Collection of Certain Mortgage Loan Payments;
Collection Account. (a) The Servicer shall use its best efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
any applicable primary mortgage insurance policy, follow such collection
procedures as shall constitute Accepted Servicing Practices.
The Servicer shall establish and maintain in the name of the
Trustee one or more Collection Accounts (collectively, the "Collection
Account"), in trust for the benefit of the Holders of the Certificates,
Exchangeable Certificates, the Additional Certificates and the Certificate
Insurer, one of which shall be established and maintained with the Trustee (the
"Trustee Collection Account"). The Servicer shall promptly provide notice to
the Certificate Insurer, the Trustee and each Rating Agency of any creation and
establishment of a Collection Account hereunder. Each Collection Account shall
be established and maintained as an Eligible Account and one Collection Account
may be maintained at the Bank of the West, provided, that all amounts deposited
in the Collection Account maintained at the Bank of the West must be transferred
to the Trustee Collection Account within 7 days of such deposit. Neither the
Collection Account nor the Trustee Collection Account constitute the assets of
the REMIC 1995-2.
On the Closing Date, the Servicer shall deposit in the Trustee
Collection Account any amounts representing the principal portion of Monthly
Payments on the Mortgage Loans made in respect of the November 15, 1995 Due Date
and received on or prior to November 30, 1995. On the third Business Day prior
to the first Remittance Date, the Servicer shall have deposited into the Trustee
Collection Account all of the following collections and payments received or
made by the Servicer in respect of monies due under the Mortgage Loans (other
than in respect of interest on the Mortgage Loans accrued on or before the Due
Date immediately preceding the Cut-Off Date), and shall, on a daily basis
thereafter (except as otherwise provided herein), deposit such collections and
payments into the Collection Account:
(i) all payments received after the Cut-Off Date on account
of principal on the Mortgage Loans and all Principal Prepayments, Curtailments
and all Net REO Proceeds collected after the Cut-Off Date;
(ii) all payments received after the Cut-Off Date on account
of interest on the Mortgage Loans (other than payments of interest that accrued
on each Mortgage Loan up to and including the Due Date immediately preceding the
Cut-Off Date);
(iii) all Net Liquidation Proceeds;
(iv) all Insurance Proceeds;
\ (v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase of
any Mortgage Loan and the amount of any Substitution Adjustment pursuant to
Sections 2.4 and 3.3 hereof; and
(vii) any amount expressly required to be deposited in the
Collection Account or Trustee Collection Account in accordance with certain
provisions of this Agreement, including, without limitation amounts in respect
of the termination of the Trust Fund (which shall be deposited in the Trustee
Collection Account), and amounts referenced in Sections 2.4(b), 3.3(a), 3.3(c),
5.6, and 6.6(d) of this Agreement;
provided, however, that the Servicer shall be entitled, at its election, either
(a) to withhold and to pay to itself the applicable Servicing Fee from any
payment on account of interest or other recovery (including Net REO Proceeds) as
received and prior to deposit of such payments in the Collection Account or (b)
to withdraw the applicable Servicing Fee from the Collection Account after the
entire payment or recovery has been deposited therein; provided, further, that
with respect to any payment of interest received by the Servicer in respect of a
Mortgage Loan (whether paid by the Mortgagor or received as Liquidation
Proceeds, Insurance Proceeds or otherwise) which is less than the full amount of
interest then due with respect to such Mortgage Loan, only that portion of such
payment that bears the same relationship to the total amount of such payment of
interest as the rate used to determine the Servicing Fee bears to the Mortgage
Interest Rate borne by such Mortgage Loan shall be allocated to the Servicing
Fee with respect to such Mortgage Loan. All other amounts shall be deposited in
the Collection Account not later than the Business Day following the day of
receipt and posting by the Servicer. All amounts collected in respect of the
Mortgage Loans and on deposit in the Collection Account shall be transferred on
a regular weekly basis into the Trustee Collection Account, provided, that
notwithstanding any regularly scheduled transfer of funds to the Trustee
Collection Account the Servicer shall, not later than 3 Business Days prior to
each Remittance Date transfer to the Trustee Collection Account all funds in the
Collection Account that are to be included in the Servicer Remittance Amount on
the Servicer Remittance Date immediately preceding the Remittance Date.
The Servicer may direct, in writing, the institution maintaining
the Collection Account or the Trustee Collection Account to invest the funds in
the Collection Account or Trustee Collection Account, as the case may be, only
in Permitted Investments. No Permitted Investment shall be sold or disposed of
at a gain prior to maturity unless the Servicer has obtained an Opinion of
Counsel (at the Servicer's expense) that such sale or disposition will not cause
the Trust Fund to be subject to the tax on income from prohibited transactions
imposed by Code Section 860F(a)(1), otherwise subject the Trust Fund to tax or
cause the REMIC 1995-2 to fail to qualify as a REMIC. All income (other than
any gain from a sale or disposition of the type referred to in the preceding
sentence) realized from any such Permitted Investment shall be for the benefit
of the Servicer as additional servicing compensation. The amount of any losses
incurred in respect of any such investments shall be deposited in the Collection
Account by the Servicer out of its own funds immediately as realized.
The foregoing requirements for deposit in the Collection Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of those described in the
last paragraph of Section 5.14 and payments in the nature of prepayment charges,
late payment charges or assumption fees need not be deposited by the Servicer in
the Collection Account. Notwithstanding any provision herein to the contrary,
if the Servicer deposits in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from the Collection
Account, and the Servicer shall have the right at all times to transfer funds
from the Collection Account to the Trustee Collection Account. All funds
deposited by the Servicer in the Collection Account and the Trustee Collection
Account shall be held therein for the account of the Trustee in trust for the
Certificateholders until disbursed in accordance with Section 6.1 or withdrawn
in accordance with Section 5.4.
(b) Prior to the time of their required deposit in the
Collection Account, all amounts required to be deposited therein may be
deposited in an account in the name of Servicer, provided that such account is
an Eligible Account. All such funds shall be held by the Servicer in trust for
the benefit of the Certificateholders and the Certificate Insurer pursuant to
the terms hereof.
(c) The Collection Account may, upon written notice by the
Trustee to the Certificate Insurer, be transferred to a different depository so
long as such transfer is to an Eligible Account.
Section 5.4 Permitted Withdrawals from the Collection Account
and Trustee Collection Account. The Servicer may, subject to or upon written
authorization from the Trustee, from time to time, make withdrawals from the
Collection Account or, as applicable, the Trustee Collection Account for the
following purposes:
(a) to reimburse itself from any funds in the Collection
Account and the Trustee Collection Account for any accrued unpaid Servicing Fees
and for unreimbursed Periodic Advances and Servicing Advances. The Servicer's
right to reimbursement for unpaid Servicing Fees and unreimbursed Servicing
Advances shall be limited to late collections on the related Mortgage Loan,
including Liquidation Proceeds, Released Mortgaged Property Proceeds, Insurance
Proceeds and such other amounts on deposit in the Collection Account as may be
collected by the Servicer from the related Mortgagor or otherwise relating to
the Mortgage Loan in respect of which such unreimbursed amounts are owed. The
Servicer's right to reimbursement for unreimbursed Periodic Advances shall be
limited to late collections of interest on any Mortgage Loan and to Liquidation
Proceeds and Insurance Proceeds on related Mortgage Loans;
(b) to reimburse itself for any Periodic Advances determined
in good faith to have become Nonrecoverable Advances, such reimbursement to be
made from any funds in the Collection Account and the Trustee Collection
Account;
(c) to withdraw from the Collection Account or the Trustee
Collection Account any Preference Amount received from a Mortgagor;
(d) to withdraw any funds deposited in the Collection
Account or Trustee Collection Account that were not required to be deposited
therein;
(e) to withdraw from the Collection Account or the Trustee
Collection Account any funds needed to pay itself Servicing Compensation
pursuant to Section 5.14 hereof to the extent not retained or paid pursuant to
Section 5.3, 5.4 or 5.14;
(f) to withdraw from the Collection Account or the Trustee
Collection Account to pay to the Seller with respect to each Mortgage Loan or
property acquired in respect thereof that has been repurchased or replaced
pursuant to Section 2.4 or 3.3 or to pay to itself with respect to each Mortgage
Loan or property acquired in respect thereof that has been purchased pursuant to
Section 8.1 all amounts received thereon and not required to be deposited into
the Collection Account or the Trustee Collection Account as a result of such
repurchase or replacement;
(g) subject to the provisions of Section 5.21, to reimburse
itself from the Collection Account or the Trustee Collection Account for (i)
Nonrecoverable Advances that are not, with respect to aggregate Servicing
Advances on any single Mortgage Loan or REO Property, in excess of the Trust
Balance thereof and (ii) for amounts to be reimbursed to the Servicer pursuant
to Section 5.22;
(h) to withdraw from the Collection Account or the Trustee
Collection Account to pay to the Seller with respect to each Mortgage Loan the
excess, if any, of (i) interest accrued and unpaid on such Mortgage Loan on the
Cut-Off Date, over (ii) interest on such Mortgage Loan from the Due Date for
such Mortgage Loan immediately preceding the Cut-Off Date to the Cut-Off Date;
(i) to transfer funds from the Collection Account into the
Trustee Collection Account and to withdraw funds from the Collection Account and
the Trustee Collection Account necessary to make deposits to the Certificate
Account (which shall include the Trustee Fee) in the amounts and in the manner
provided for in Section 6.1 hereof;
(j) to pay itself any interest earned on or investment
income earned with respect to funds in the Collection Account or Trustee
Collection Account;
(k) to withdraw from the Collection Account, on behalf of
the Seller or other Holder of the Exchangeable Certificate, any amount deposited
therein that is otherwise allocable to an Additional Balance assigned to an
Exchangeable Certificate held by the Seller or such Holder and deposit such
amount into the Exchangeable Certificate Account; and
(l) to clear and terminate the Collection Account and
Trustee Collection Account upon the termination of this Agreement.
The Servicer shall keep and maintain a separate accounting for
each Mortgage Loan for the purpose of accounting for withdrawals from the
Collection Account pursuant to subclause (a).
Section 5.5 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Servicer shall maintain accurate records
reflecting casualty insurance coverage.
With respect to each Mortgage Loan as to which the Servicer
maintains escrow accounts, the Servicer shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates and other
charges which are or may become a lien upon the Mortgaged Property and the
status of primary mortgage guaranty insurance premiums, if any, and casualty
insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in any escrow account which shall have been estimated
and accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage. To the extent that a Mortgage does not
provide for escrow payments, the Servicer shall, if it has received notice of a
default or deficiency, monitor such payments to determine if they are made by
the Mortgagor.
Section 5.6 Maintenance of Casualty Insurance. For each
Mortgage Loan, the Servicer shall maintain or cause to be maintained, to the
extent required by the related Mortgage Loan to be maintained by the Mortgagor,
fire and casualty insurance with a standard mortgagee clause and extended
coverage in an amount which is not less than the replacement value of the
improvements securing such Mortgage Loan or the unpaid principal balance of
such Mortgage Loan, whichever is less. If, upon origination of the Mortgage
Loan, the Mortgaged Property was in an area identified in the Federal Register
by the Federal Emergency Management Agency as having special flood hazards (and
such flood insurance has been made available) the Servicer will cause to be
maintained, to the extent required by the related Mortgage Loan to be maintained
by the Mortgagor, a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration with a generally
acceptable insurance carrier, in an amount representing coverage not less than
the least of (i) the unpaid principal balance of the Mortgage Loan, (ii) the
full insurable value of the Mortgaged Property or (iii) the maximum amount of
insurance available under the Flood Disaster Protection Act of 1973. With
respect to each Mortgage Loan, the Servicer shall also maintain fire insurance
with extended coverage and, if applicable, flood insurance on REO Property in an
amount which is at least equal to the lesser of (i) the maximum insurable value
of the improvements which are a part of such property and (ii) the principal
balance owing on such Mortgage Loan at the time of such foreclosure or grant of
deed in lieu of foreclosure plus accrued interest and related Liquidation
Expenses. It is understood and agreed that such insurance shall be with
insurers approved by the Servicer and that no earthquake or other additional
insurance is to be required of any Mortgagor or to be maintained on property
acquired in respect of a defaulted loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. Pursuant to Section 5.3, any amounts collected by the
Servicer under any insurance policies maintained pursuant to this Section 5.6
(other than amounts to be applied to the restoration or repair of the related
Mortgaged Property or released to the Mortgagor in accordance with Accepted
Servicing Practices) shall be deposited into the Collection Account, subject to
withdrawal pursuant to Section 5.4. Any cost incurred by the Servicer in
maintaining any such insurance shall be added to the amount owing under the
Mortgage Loan where the terms of the Mortgage Loan so permit; provided, however,
that the addition of any such cost shall not be taken into account for purposes
of calculating the principal amount of the Mortgage Note or the Mortgage Loan
secured by the Mortgage Note or the distributions to be made to the
Certificateholders. Such costs shall be recoverable by the Servicer pursuant to
Section 5.4. In the event that the Servicer shall obtain and maintain a blanket
policy issued by an insurer that is acceptable to FNMA or FHLMC, insuring
against hazard losses on all of the Mortgage Loans, it shall conclusively be
deemed to have satisfied its obligation as set forth in the first sentence of
this Section 5.6, it being understood and agreed that such policy may contain a
deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related mortgaged or acquired property an
insurance policy complying with the first sentence of this Section 5.6 and there
shall have been a loss which would have been covered by such a policy had it
been maintained, be required to deposit from its own funds into the Collection
Account the amount not otherwise payable under the blanket policy because of
such deductible clause.
Section 5.7 Servicer Account. In addition to the Collection
Account, the Servicer shall be permitted to establish and maintain one or more
Servicer Accounts (collectively, the "Servicer Account"), which shall be an
Eligible Account, in which the Servicer may deposit all payments by, and
collections from, the Mortgagors received in connection with the Mortgage Loans
prior to the Servicer's deposit of all such funds required to be deposited into
the Collection Account. Withdrawals may be made out of such collections in the
Servicer Account to reimburse the Servicer for any advances not otherwise
required to be made from the Collection Account or for any refunds made by the
Servicer of any sums determined to be overages, or to pay any interest owed to
Mortgagors on such account to the extent required by law, and in order to
terminate and clear the Servicer Account upon the termination of this Agreement
upon the termination of the Trust Fund.
Section 5.8 Fidelity Bond; Errors and Omissions Policy. (a)
The Servicer shall maintain with a responsible company, and at its own expense,
a blanket fidelity bond (a "Fidelity Bond") and an errors and omissions
insurance policy (an "Errors and Omissions Policy"), in a minimum amount
acceptable to FNMA or otherwise in an amount as is commercially available at a
cost that is not generally regarded as excessive by industry standards, with
broad coverage on all officers, employees or other persons acting in any
capacity requiring such persons to handle funds, money, documents or papers
relating to the Mortgage Loans ("Servicer Employees"). Any such fidelity bond
and errors and omissions insurance shall protect and insure the Servicer against
losses, including losses resulting from forgery, theft, embezzlement, fraud,
errors and omissions and negligent acts of such Servicer Employees. Such
fidelity bond shall also protect and insure the Servicer against losses in
connection with the release or satisfaction of a Mortgage Loan without having
obtained payment in full of the indebtedness secured thereby. No provision of
this Section 5.8 requiring such fidelity bond and errors and omissions insurance
shall diminish or relieve the Servicer from its duties and obligations as set
forth in this Agreement. Upon the request of the Trustee, the Certificate
Insurer or any Certificateholder, the Servicer shall cause to be delivered to
the Trustee, such Certificateholder or the Certificate Insurer a certified true
copy of such fidelity bond and insurance policy. On the Closing Date, such bond
and insurance is maintained with certain underwriters as may be specified in
writing to the Certificate Insurer and the Trustee, from time to time. Any such
fidelity bond or insurance policy shall not be cancelled or modified in a
materially adverse manner without written notice to the Trustee and the
Certificate Insurer.
(b) The Servicer shall be deemed to have complied with this
provision if one of its respective Affiliates has such a Fidelity Bond and
Errors and Omissions Policy and, by the terms of such fidelity bond and errors
and omission policy, the coverage afforded thereunder extends to the Servicer.
The Servicer shall cause each and every Subservicer for it to maintain a policy
of insurance covering errors and omissions and a fidelity bond which would meet
the requirements of Section 5.8(a) hereof. Any such Fidelity Bond and Errors
and Omissions Policy shall not be cancelled or modified in a materially adverse
manner without written notice to the Certificate Insurer.
Section 5.9 Collection of Taxes, Assessments and Other Items.
The Servicer shall deposit all payments by Mortgagors for taxes, assessments,
primary mortgage or hazard insurance premiums or comparable items in the
Collection Account. Withdrawals from the Collection Account may be made to
effect payment of taxes, assessments, primary mortgage or hazard insurance
premiums or comparable items, to reimburse the Servicer out of related
collections for any advances made in the nature of any of the foregoing, to
refund to any Mortgagors any sums determined to be overages, or to pay any
interest owed to Mortgagors on such account to the extent required by law. The
Servicer shall advance the payments referred to in the first sentence of this
Section 5.9 that are not timely paid by the Mortgagors on the date when the tax,
premium or other cost for which such payment is intended is due, but the
Servicer shall be required to so advance only to the extent that such advances,
in the good faith judgment of the Servicer, will be recoverable by the Servicer
pursuant to Section 5.3 out of Liquidation Proceeds, Insurance Proceeds or
otherwise.
Section 5.10 Periodic Filings with the Securities and Exchange
Commission; Additional Information. The Trustee shall prepare or cause to be
prepared for filing with the Commission (other than the initial Current Report
on Form 8-K to be filed by the Depositor in connection with the issuance of the
Certificates) any and all reports, statements and information respecting the
Trust and/or the Certificates required to be filed (as set forth in written
instructions received from the Depositor within 10 Business Days of the Closing
Date), and shall solicit any and all proxies of the Certificateholders whenever
such proxies are required to be solicited, pursuant to the Securities Exchange
Act of 1934, as amended. The Depositor shall promptly file, and exercise its
best efforts to obtain a favorable response to, no-action requests with, or
other appropriate exemptive relief from, the Commission seeking the usual and
customary exemption from such reporting requirements granted to issuers of
securities similar to the Certificates. Fees and expenses incurred by the
Trustee in connection with the foregoing shall be reimbursed pursuant to Section
9.5 and shall not be paid by the Trust.
Section 5.11 Enforcement of Due-on-Sale Clauses; Assumption
Agreements. In any case in which a Mortgaged Property is about to be conveyed
by the Mortgagor (whether by absolute conveyance or by contract of sale, and
whether or not the Mortgagor remains liable thereon) and the Servicer has
knowledge of such prospective conveyance, the Servicer shall effect assumptions
in accordance with the terms of any due-on-sale provision contained in the
related Mortgage Note or Mortgage. The Servicer shall enforce any due-on-sale
provision contained in such Mortgage Note or Mortgage to the extent the
requirements thereunder for an assumption of the Mortgage Loan have not been
satisfied to the extent permitted under the terms of the related Mortgage Note,
unless such provision is not exercisable under applicable law and governmental
regulations or in the Servicer's judgment, such exercise is reasonably likely to
result in legal action by the Mortgagor, or such conveyance is in connection
with a permitted assumption of the related Mortgage Loan. Subject to the
foregoing, the Servicer is authorized to take or enter into an assumption
agreement from or with the Person to whom such property is about to be conveyed,
pursuant to which such person becomes liable under the related Mortgage Note
and, unless prohibited by applicable state law, the Mortgagor remains liable
thereon, provided that the Mortgage Interest Rate with respect to such Mortgage
Loan shall remain unchanged. The Servicer is also authorized to release the
original Mortgagor from liability upon the Mortgage Loan and substitute the new
Mortgagor as obligor thereon. In connection with such assumption or
substitution, the Servicer shall apply such underwriting standards and follow
such practices and procedures as shall be normal and usual for mortgage loans
similar to the Mortgage Loans and as it applies to mortgage loans owned solely
by it. The Servicer shall notify the Trustee that any such assumption or
substitution agreement has been completed by forwarding to the Trustee the
original copy of such assumption or substitution agreement, which copy shall be
added by the Trustee to the related Mortgage File and shall, for all purposes,
be considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. In connection with any
such assumption or substitution agreement, the Mortgage Interest Rate of the
related Mortgage Note and the payment terms shall not be changed. Any fee
collected by the Servicer for entering into an assumption or substitution of
liability agreement will be retained by the Servicer as servicing compensation.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any conveyance by
the Mortgagor of the property subject to the Mortgage or any assumption of a
Mortgage Loan by operation of law which the Servicer in good faith determines it
may be restricted by law from preventing, for any reason whatsoever, or if the
exercise of such right would impair or threaten to impair any recovery under any
applicable insurance policy or, in the Servicer's judgment, be reasonably likely
to result in legal action by the Mortgagor.
Section 5.12 Realization upon Defaulted Mortgage Loans. Except
as provided in the last two paragraphs of this Section 5.12, the Servicer shall,
on behalf of the Trustee, foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 5.3. In connection with
such foreclosure or other conversion, the Servicer shall follow Accepted
Servicing Practices. The foregoing is subject to the proviso that the Servicer
shall not be required to expend its own funds in connection with any foreclosure
or to restore any damaged property unless it shall determine that (i) such
foreclosure and/or restoration will increase the proceeds of liquidation of the
Mortgage Loan to Certificateholders after reimbursement to itself for such
expenses and (ii) such expenses will be recoverable to it through Liquidation
Proceeds (respecting which it shall reimburse itself for such expense prior to
the deposit in the Collection Account of such proceeds). The Servicer shall be
entitled to reimbursement of the Servicing Fee and other amounts due it, if any,
to the extent, but only to the extent, that withdrawals from the Collection
Account and the Trustee Collection Account with respect thereto are permitted
under Section 5.3.
The Servicer may foreclose against the Mortgaged Property
securing a defaulted Mortgage Loan either by foreclosure, by sale or by strict
foreclosure, and in the event a deficiency judgment is available against the
Mortgagor or any other person, may proceed for the deficiency.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (an "REO Property"), the deed or
certificate of sale shall be issued to the Trustee, or to the Servicer on behalf
of the Trustee and the Certificateholders. Notwithstanding any such acquisition
of title and cancellation of the related Mortgage Loan, such REO Mortgage Loan
shall be considered to be a Mortgage Loan held in the applicable REMIC of the
Trust Fund until such time as the related Mortgaged Property shall be sold and
such REO Mortgage Loan becomes a Liquidated Mortgage Loan. Consistent with the
foregoing, for purposes of all calculations hereunder, so long as such REO
Mortgage Loan shall be considered to be an Outstanding Mortgage Loan:
(i) Notwithstanding that the indebtedness evidenced by the related
Mortgage Note shall have been discharged, such Mortgage Note and the related
amortization schedule in effect at the time of any such acquisition of title
(after giving effect to any previous Curtailments and before any adjustment
thereto by reason of any bankruptcy or similar proceeding or any moratorium or
similar waiver or grace period) shall be assumed to remain in effect, except
that such schedule shall be adjusted to reflect the application of Net REO
Proceeds received in any month pursuant to the succeeding clause.
(ii) Net REO Proceeds received in any month shall be deemed to have
been received first in payment of the accrued interest that remained unpaid on
the date that such Mortgage Loan became an REO Mortgage Loan of the applicable
REMIC of the Trust Fund, with the excess thereof, if any, being deemed to have
been received in respect of the delinquent principal installments that remained
unpaid on such date. Thereafter, Net REO Proceeds received in any month shall
be applied to the payment of installments of principal and accrued interest on
such Mortgage Loan deemed to be due and payable in accordance with the terms of
such Mortgage Note and such amortization schedule. If such Net REO Proceeds
exceed the then Unpaid REO Amortization, the excess shall be treated as a
Curtailment received in respect of such Mortgage Loan.
(iii) The Net REO Proceeds allocated to the payment of a related
Servicing Fee shall be limited to an amount equal to the product of (x) the
total amount of Net REO Proceeds allocable to interest multiplied by (y) the
fraction, the numerator of which is the interest rate at which the Servicing Fee
is determined and the denominator of which is the Mortgage Interest Rate borne
by such Mortgage Loan.
In the event that a REMIC of the Trust Fund acquires any
Mortgaged Property as aforesaid or otherwise in connection with a default or
imminent default on a Mortgage Loan, such Mortgaged Property shall be disposed
of by or on behalf of such REMIC within two years after its acquisition thereby
unless (a) the Servicer shall have provided to the Trustee an Opinion of Counsel
to the effect that the holding by such REMIC of the Trust Fund of such Mortgaged
Property subsequent to two years after its acquisition (and specifying the
period beyond such two-year period for which the Mortgaged Property may be held)
will not cause such REMIC to be subject to the tax on prohibited transactions
imposed by Code Section 860F(a)(1), otherwise subject such REMIC or the Trust
Fund to tax or cause the applicable REMIC to fail to qualify as a REMIC at any
time that any Certificates are outstanding, or (b) the Servicer or the Trustee
(at the Servicer's expense) shall have applied for, at least 60 days prior to
the expiration of such two-year period, an extension of such two-year period in
the manner contemplated by Code Section 856(e)(3), in which case the two-year
period shall be extended by the applicable period. The Servicer shall further
ensure that the Mortgaged Property is administered so that it constitutes
"foreclosure property" within the meaning of Code Section 860G(a)(8) at all
times, that the sale of such property does not result in the receipt by the
applicable REMIC of the Trust Fund of any income from non-permitted assets as
described in Code Section 860F(a)(2)(B), and that such REMIC does not derive any
"net income from foreclosure property" within the meaning of Code Section
860G(c)(2) with respect to such property.
In lieu of foreclosing upon any defaulted Mortgage Loan, the
Servicer may, in its discretion, permit the assumption of such Mortgage Loan if,
in the Servicer's judgment, such default is unlikely to be cured and if the
assuming borrower satisfies the Servicer's underwriting guidelines with respect
to mortgage loans owned by the Servicer. In connection with any such
assumption, the Mortgage Interest Rate of the related Mortgage Note and the
payment terms shall not be changed. Any fee collected by the Servicer for
entering into an assumption agreement will be retained by the Servicer as
servicing compensation. Alternatively, the Servicer may encourage the
refinancing of any defaulted Mortgage Loan by the Mortgagor.
Notwithstanding the foregoing, prior to instituting foreclosure
proceedings or accepting a deed-in-lieu of foreclosure with respect to any
Mortgaged Property, the Servicer shall make, or cause to be made, inspection of
the Mortgaged Property in accordance with the Accepted Servicing Practices and,
with respect to environmental hazards, such procedures are as required by the
provisions of the FNMA's selling and servicing guide applicable to single-family
homes and in effect on the date hereof. The Servicer shall be entitled to rely
upon the results of any such inspection made by others. In cases where the
inspection reveals that such Mortgaged Property is potentially contaminated with
or affected by hazardous wastes or hazardous substances, the Servicer shall
promptly give written notice of such fact to the Certificate Insurer, the
Trustee and each Class A Certificateholder. The Servicer shall not commence
foreclosure proceedings or accept a deed-in-lieu of foreclosure for Mortgaged
Property without obtaining the consent of the Certificate Insurer.
Section 5.13. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the Servicer of
a notification that payment in full will be escrowed in a manner customary for
such purposes, the Servicer shall (i) immediately deliver to the Trustee a
notice substantially in the form of the Request for Release attached hereto as
Exhibit H (which request shall include a statement to the effect that all
amounts received in connection with such payment which are required to be
deposited in the applicable Collection Account pursuant to Section 5.3 have been
or shall be so deposited) and executed by a Servicing Officer and (ii) request
delivery to it of the Mortgage File. Upon receipt of such Request for Release,
the Trustee, or the Custodian on its behalf, shall promptly release the related
Mortgage File to the Servicer. Upon any such payment in full, the Servicer is
authorized to give, as agent for the Trustee and the mortgagee under the
Mortgage which secured the Mortgage Loan, an instrument of satisfaction (or
assignment of mortgage without recourse) regarding the property subject to such
Mortgage, which instrument of satisfaction or assignment, as the case may be,
shall be delivered to the Person or Persons entitled thereto against receipt
therefor of such payment, it being understood and agreed that no expenses
incurred in connection with such instrument of satisfaction or assignment, as
the case may be, shall be chargeable to the Collection Account. In connection
therewith, the Trustee shall execute and return to the Servicer any required
power of attorney provided to the Trustee by the Servicer and other required
documentation in accordance with Section 5.1(d). From time to time and as
appropriate for the servicing or foreclosure of any Mortgage Loan and in
accordance with Accepted Servicing Practices, the Trustee shall, upon request of
the Servicer and delivery to the Trustee of a Request for Release signed by a
Servicing Officer, release, or cause the Custodian to release, the related
Mortgage File to the Servicer and shall execute such documents as shall be
necessary to the prosecution of any such proceedings. Such Request for Release
shall obligate the Servicer to return the Mortgage File 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
similar to the Request for Release hereinabove specified, the Mortgage File
shall be delivered by the Trustee to the Servicer.
Section 5.14 Servicing Fee; Servicing Compensation. (a) The
Servicer shall be entitled, at its election, either (i) to pay itself the
Servicing Fee out of any Mortgagor payment on account of interest or Net REO
Proceeds actually collected prior to the deposit of such payment in the
Collection Account or (ii) to withdraw from the Collection Account or Trustee
Collection Account such Servicing Fee pursuant to Section 5.4. The Servicer
shall also be entitled, at its election, either (a) to pay itself the Servicing
Fee in respect of each delinquent Mortgage Loan out of Liquidation Proceeds in
respect of such Mortgage Loan or other recoveries with respect thereto to the
extent permitted in Section 5.3(a) or (b) to withdraw from the Collection
Account the Servicing Fee in respect of each such Mortgage Loan to the extent of
such Liquidation Proceeds or other recoveries, to the extent permitted by
Section 5.4(a).
The aggregate Servicing Fee is reserved for the administration
of the Trust Fund and, in the event of replacement of the Servicer as servicer
of the Mortgage Loans, for the payment of other expenses related to such
replacement. The aggregate Servicing Fee shall be offset as provided in Section
5.20. The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder (including maintenance of the
hazard insurance required by Section 5.5) and shall not be entitled to
reimbursement therefor except as specifically provided herein.
(b) Servicing compensation in the form of assumption fees, late
payment charges, tax service fees, fees for statement of account or payoff of
the Mortgage Loan (to the extent permitted by applicable law) or otherwise shall
be retained by the Servicer and are not required to be deposited in the
Collection Account.
Section 5.15 Reports to the Trustee; Collection Account
Statements. Not later than 15 days after each Remittance Date, the Servicer
shall provide to the Trustee and the Certificate Insurer a statement, certified
by a Servicing Officer, setting forth the status of the Collection Account and
the Trustee Collection Account as of the close of business on the related
Servicer Remittance Date, stating that all distributions required by this
Agreement to be made by the Servicer on behalf of the Trustee have been made (or
if any required distribution has not been made by the Servicer, specifying the
nature and status thereof) and showing, for the period covered by such
statement, the aggregate of deposits into and withdrawals from the Collection
Account and the Trustee Collection Account for each category of deposit
specified in Section 5.3 and each category of withdrawal specified in Section
5.4, the allocation of such amounts between principal and interest collected on
the Trust Balances and any Additional Balances and the aggregate of deposits
into the Certificate Account and the Exchangeable Certificate Account as
specified in Sections 6.1(d) and 6.1(f), respectively. Such statement shall
also state the aggregate unpaid principal balance of all the Mortgage Loans as
of the close of business on the last day of the month preceding the month in
which such Remittance Date occurs and the allocation of such aggregated balances
between the Trust Balances and the Additional Balances. Copies of such
statement shall be provided by the Trustee to any Certificateholder upon
request.
Section 5.16 Annual Statement as to Compliance. The Servicer
will deliver to the Trustee, the Certificate Insurer, S&P and Moody's not later
than the last day of the fifth month subsequent to the end of the Servicer's
fiscal year beginning in 1996, an Officers' Certificate stating as to each
signer thereof, that (i) a review of the activities of the Servicer during the
preceding calendar year and of its performance under this Agreement has been
made under such officer's supervision, and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement and any applicable Supplement throughout such year, or if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof. Such
Officers' Certificate shall be accompanied by the statement described in Section
5.17 of this Agreement. Copies of such statement shall, upon request, be
provided to any Certificateholder by the Servicer, or by the Trustee at the
Servicer's expense if the Servicer shall fail to provide such copies.
Section 5.17 Annual Independent Public Accountants' Servicing
Report. Not later than the last day of the fifth month subsequent to the end of
the Servicer's fiscal year, beginning in 1996, the Servicer, at its expense,
shall cause a firm of nationally recognized independent public accountants to
furnish a statement to the Trustee, the Certificate Insurer, S&P and Moody's to
the effect that, on the basis of an examination of certain documents and records
relating to the servicing of the mortgage loans being serviced by the Servicer
under pooling and servicing agreements similar to this Agreement (which
agreements shall be described in a schedule to such statement), conducted
substantially in compliance with the Uniform Single Audit Program for Mortgage
Bankers, such firm is of the opinion that such servicing has been conducted in
compliance with this Agreement and any applicable Supplement. Copies of such
statement shall, upon request, be provided to Certificateholders by the
Servicer, or by the Trustee at the Servicer's expense if the Servicer shall fail
to provide such copies. For purposes of such statement, such firm may
conclusively presume that any pooling and servicing agreement which governs
mortgage pass-through certificates offered by the Depositor (or any predecessor
or successor thereto) in a registration statement under the Securities Act of
1933, as amended, is similar to this Agreement, unless such other pooling and
servicing agreement expressly states otherwise.
Section 5.18 [Reserved].
Section 5.19 Reports to be Provided by the Servicer. (a) In
connection with the transfer of the Certificates, the Trustee on behalf of any
Certificateholder may request that the Servicer make available to any
prospective Certificateholder annual unaudited financial statements of the
Servicer (or, upon request, audited annual financial statements of the
Servicer's ultimate parent corporation) for one or more of the most recently
completed fiscal years for which such statements are available, which request
shall not be unreasonably denied or unreasonably delayed. Such annual unaudited
financial statements also shall be made available to the Certificate Insurer
upon request.
(b) The Servicer also agrees to make available on a
reasonable basis to the Certificate Insurer or any prospective Certificateholder
a knowledgeable financial or accounting officer for the purpose of answering
reasonable questions respecting recent developments affecting the Servicer or
the financial statements of the Servicer and to permit the Certificate Insurer
or any prospective Certificateholder to inspect the Servicer's servicing
facilities during normal business hours for the purpose of satisfying the
Certificate Insurer or such prospective Certificateholder that the Servicer has
the ability to service the Mortgage Loans in accordance with this Agreement.
The reasonable out of pocket expenses of the Servicer incurred
in connection with (a) and (b) above shall be reimbursable to the Servicer as a
Servicing Advance.
Section 5.20 Adjustment of Servicing Compensation in Respect of
Prepaid Mortgage Loans. The aggregate amount of the Servicing Fees that the
Servicer shall be entitled to receive with respect to all of the Mortgage Loans
and each Remittance Date shall be offset on such Remittance Date by an amount
equal to the aggregate Prepayment Interest Shortfall with respect to all
Mortgage Loans which were subjects of Principal Prepayments during the Due
Period applicable to such Remittance Date. The amount of any offset against the
aggregate Servicing Fee with respect to any Remittance Date under this Section
5.20 shall be limited to the aggregate amount of the Servicing Fees otherwise
payable to the Servicer (without adjustment on account of Prepayment Interest
Shortfalls) with respect to (i) scheduled payments having the Due Date occurring
in Due Period applicable to such Remittance Date received by the Servicer prior
to the Servicer Remittance Date, and (ii) Principal Prepayments, Curtailments
and Liquidation Proceeds received in the Due Period applicable to such
Remittance Date, and the rights of the Certificateholders to the offset of the
aggregate Prepayment Interest Shortfalls shall not be cumulative.
Section 5.21 Periodic Advances. If, on any Determination Date,
the Servicer determines that any Monthly Payments due on the Due Date
immediately preceding such Determination Date have not been received as of the
close of business on such Determination Date, the Servicer shall determine the
amount of any Periodic Advance required to be made with respect to such unpaid
Monthly Payments on the related Servicer Remittance Date. The Servicer shall,
one Business Day after such Determination Date, certify and deliver a magnetic
tape or diskette to the Trustee indicating the payment status of each Mortgage
Loan as of such Determination Date and shall cause to be deposited in the
Trustee Collection Account an amount equal to the Periodic Advance for the
related Servicer Remittance Date, which deposit may be made in whole or in part
from funds in the Collection Account being held for future distribution or
withdrawal on or in connection with Remittance Dates in subsequent months. Any
funds being held for future distribution to Certificateholders and so used shall
be replaced by the Servicer from its own funds by deposit into the Trustee
Collection Account on or before the Determination Date corresponding to any such
future Servicer Remittance Date to the extent that funds in the Trustee
Collection Account on such future Determination Date shall otherwise be less
than the amount required to be transferred to the Certificate Account in respect
of payments to Certificateholders required to be made on the Remittance Date
related to such future Determination Date.
The Servicer shall designate on its records the specific
Mortgage Loans and related installments (or portions thereof) as to which such
Periodic Advance shall be deemed to have been made, such designation, except in
cases of manifest error, being conclusive for purposes of withdrawals from the
Collection Account or Trustee Collection Account pursuant to Section 5.4.
Section 5.22 Indemnification; Third Party Claims. (a) Each of
the Servicer, the Depositor, and the Seller (solely for the purpose of this
Section 5.22, the "Indemnifying Parties") agrees to indemnify and to hold each
of the Servicer, the Depositor, the Trustee, the Seller, the Certificate Insurer
and each Certificateholder (solely for the purpose of this Section 5.22, the
"Indemnified Parties") harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Indemnified Parties may, respectively, sustain
in any way related to the failure of any one or more of the Indemnifying Parties
to perform its respective duties in compliance with the terms of this Agreement.
Each Indemnified Party and the Servicer shall immediately notify the other
Indemnified Parties if a claim is made by a third party with respect to this
Agreement, and the Servicer shall assume the defense of any such claim and pay
all expenses in connection therewith, including reasonable counsel fees approved
by the Certificate Insurer, and promptly pay, discharge and satisfy any judgment
or decree which may be entered against the Indemnified Parties in respect of
such claim. The Trustee shall, out of the assets of the Trust Fund, reimburse
the Servicer in accordance with Section 5.14 hereof for all amounts advanced by
it pursuant to the preceding sentence except when the claim relates directly to
the failure of the Servicer to service and administer the Mortgages in
compliance with the terms of this Agreement; provided, that the Servicer's
indemnity hereunder shall not be in any manner conditioned on the availability
of funds for such reimbursement.
(b) The Trustee, at the written request of the Servicer
(which the Trustee may conclusively rely on) may, if necessary, reimburse the
Servicer from amounts otherwise distributable on the Class R Certificates for
all amounts advanced by the Servicer pursuant to Section 4.4(a)(ii) of the
Purchase and Sale Agreement, except when the claim relates directly to the
failure of the Servicer, if it is, or is an Affiliate of, the Seller, to perform
its obligations to service and administer the Mortgages in compliance with the
terms of the Purchase and Sale Agreement, or the failure of the Seller to
perform its duties in compliance with the terms of this Agreement.
(c) The Trustee, at the written request of the Servicer
(which the Trustee may conclusively rely on) shall reimburse the Seller from
amounts otherwise distributable on the Class R Certificates for all amounts
advanced by the Seller pursuant to the second sentence of Section 4.4(a)(ii) of
the Purchase and Sale Agreement except when the relevant claim relates directly
to the failure of the Seller to perform its duties in compliance with the terms
of the Purchase and Sale Agreement.
Section 5.23 Maintenance of Corporate Existence and Licenses;
Merger or Consolidation of the Servicer. (a) The Servicer will keep in full
effect its existence, rights and franchises as a corporation, will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement and will otherwise operate its business so as to cause the
representations and warranties under Section 3.1 to be true and correct at all
times under this Agreement.
(b) Any Person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person succeeding
to the business of the Servicer, shall be an established mortgage loan servicing
institution acceptable to the Certificate Insurer that has a net worth of at
least $15,000,000 and is a Permitted Transferee, and in all events shall be the
successor of the Servicer without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Servicer shall send notice of any such merger or
consolidation to the Trustee and the Certificate Insurer.
Section 5.24 Assignment of Agreement by Servicer; Servicer Not
to Resign. The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual written consent of
the Servicer, the Seller, the Certificate Insurer and the Trustee or upon the
determination that the Servicer's duties hereunder are no longer permissible
under applicable law and that such incapacity cannot be cured by the Servicer
without the incurrence, in the reasonable judgment of the Certificate Insurer,
of unreasonable expense. Any such determination that the Servicer's duties
hereunder are no longer permissible under applicable law permitting the
resignation of the Servicer shall be evidenced by a written Opinion of Counsel
(who may be counsel for the Servicer) to such effect delivered to the Trustee,
the Seller, the Depositor and the Certificate Insurer. No such resignation
shall become effective until the Trustee or a successor appointed in accordance
with the terms of this Agreement has assumed the Servicer's responsibilities and
obligations hereunder in accordance with Section 7.2. The Servicer shall provide
the Trustee, Moody's and S&P and the Certificate Insurer with 30 days prior
written notice of its intention to resign pursuant to this Section 5.24.
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ARTICLE VI
Distributions and Payments
Section 6.1 Establishment of Certificate Account and
Exchangeable Certificate Account; Deposits to the Certificate Account and the
Exchangeable Certificate Account. (a) The Trustee shall establish and maintain
the Certificate Account which shall be titled "Certificate Account, The Chase
Manhattan Bank, N.A., as trustee for the registered holders of Mortgage Pass-
Through Certificates, Series 1995-2, Class A and Class R" and which shall be an
Eligible Account. Notice of the establishment of the Certificate Account shall
be promptly provided in writing to each of the Servicer, the Rating Agencies and
the Certificate Insurer.
(b) The Trustee shall establish and maintain the
Exchangeable Certificate Account which shall be titled "Exchangeable Certificate
Account, The Chase Manhattan Bank, N.A., as trustee for the registered holders
of Mortgage Pass-Through Certificates, Series 1995-2, Exchangeable
Certificates." Pursuant to Section 6.11, the Trustee shall establish additional
Exchangeable Certificate Accounts in connection with the issuance of additional
Exchangeable Certificates. In connection with each new Series of Additional
Certificates, the Trustee shall establish a related account (each, an
"Additional Certificate Account"). Notice of the establishment of each Account
created pursuant to this Section 6.1(b) shall be promptly provided in writing to
each of the Servicer, the Rating Agencies and the Certificate Insurer.
(c) The Servicer may direct the Trustee in writing to invest
the funds in the Certificate Account only in Permitted Investments which mature
not later than the Business Day prior to the Remittance Date. No Permitted
Investment shall be sold or disposed of at a gain prior to maturity unless the
Servicer has delivered to the Trustee an Opinion of Counsel (at the Servicer's
expense) that such sale or disposition will not cause the Trust Fund to be
subject to the tax on income from prohibited transactions imposed by Code
Section 860F(a)(1), otherwise subject the Trust Fund to tax or cause the REMIC
1995-2 to fail to qualify as a REMIC. All income (other than any gain from a
sale or disposition of the type referred to in the preceding sentence) realized
from any such Permitted Investment shall be for the benefit of the Servicer as
additional servicing compensation. The amount of any losses incurred in respect
of any such investments shall be deposited in the Certificate Account by the
Servicer out of its own funds immediately as realized.
(d) On each Servicer Remittance Date, the Servicer shall
cause to be deposited in the Certificate Account, (i) from funds on deposit in
the Trustee Collection Account, an amount equal to the Servicer Remittance
Amount and (ii) from related funds on deposit in the Collection Account or the
Trustee Collection Account, the Net Foreclosure Profits, if any with respect to
the related Remittance Date, minus any portion thereof payable to the Servicer
pursuant to Section 5.3, net of the Exchangeable Certificate Allocation.
(e) On the Business Day prior to each Remittance Date, the
Trustee shall transfer funds on deposit in the Trustee Collection Account into
the Certificate Account in the amount specified by the Servicer pursuant to
Section 6.4(d) hereof.
(f) On each Servicer Remittance Date, the Servicer shall
cause to be deposited in the Exchangeable Certificate Account, all amounts on
deposit in the Trustee Collection Account and the Collection Account allocable
to the Exchangeable Certificate in accordance with the definition of Servicer
Remittance Amount and the definition of Exchangeable Certificate Allocation
hereof. In the event that there is more than one Exchangeable Certificate
Account or any Additional Certificate Accounts have been established, all funds
herein required to be deposited in the Exchangeable Certificate Account shall be
allocated among Exchangeable Certificate Account(s) and/or Additional
Certificate Account(s) as set forth in one or more "Exchange Notices," as such
term is defined in Section 6.11.
Section 6.2 Permitted Withdrawals From the Certificate
Account and The Exchangeable Certificate Account. The Trustee shall, in
accordance with the Servicer's written directions to the Trustee as described
in Section 6.5, withdraw or cause to be withdrawn
(a) funds from the Certificate Account for the following
purposes:
(i) to effect the distributions described in Section
6.5(a);
(ii) to pay to or upon the direction of the Seller
with respect to each Mortgage Loan or property acquired in respect thereof that
has been repurchased or replaced pursuant to Section 2.4 or 3.3 or to pay to the
Servicer with respect to each Mortgage Loan or property acquired in respect
thereof that has been purchased all amounts received thereon deposited in the
Certificate Account that do not constitute property of the Trust Fund;
(iii) to pay the Servicer any interest earned on or
investment income earned with respect to funds in the Certificate Account;
(iv) to return to the Trustee Collection Account any
amount deposited in the Certificate Account that was not required to be
deposited therein; and
(v) to clear and terminate the Certificate Account
upon termination of the Trust Fund pursuant to Article VIII.
The Trustee shall keep and maintain a separate accounting for
withdrawals from the Certificate Account pursuant to each of subclauses (a)(i)
through (a)(v) listed above.
(b) funds from the Exchangeable Certificate Account, for the
following purposes:
(i) to effect the distributions described in Section
6.5(b);
(ii) to pay to the Servicer any interest earned on or
investment income earned with respect to funds in the Exchangeable Certificate
Account;
(iii) to return to the Trustee Collection Account or
the Collection Account any amount deposited in the Exchangeable Certificate
Account that was not required to be deposited therein; and
(iv) to clear and terminate the Exchangeable
Certificate Account upon termination of the Trust Fund pursuant to Article VIII
hereof.
The Trustee shall keep and maintain a separate accounting for
withdrawals from the Exchangeable Certificate Account pursuant to each of
subclauses (b)(i) through (b)(v).
Section 6.3 Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of all money and
other property payable to or receivable by the Trustee pursuant to this
Agreement, including, but not limited to, (a) all payments due on the Mortgage
Loans in accordance with the respective terms and conditions of such Mortgage
Loans and required to be paid over to the Trustee by the Servicer or by any
Subservicer and (b) Insured Payments. The Trustee shall hold all such money and
property received by it, as part of the Trust Fund and shall apply it as
provided in this Agreement.
Section 6.4 The Reserve Account and the Certificate Insurance
Policy. (a) On the Closing Date, the Trustee shall establish the Reserve Account
entitled "Reserve Account, The Chase Manhattan Bank, N.A., as trustee for the
registered holders of Mortgage Pass-Through Certificates, Series 1995-2, Class A
and Class R" for the benefit of the Trust, the Certificateholders and the
Certificate Insurer. The Trustee shall have exclusive control over such Reserve
Account and the sole right of withdrawal from such Account. On the Closing
Date, the Depositor, from the proceeds of the offering of the Certificates,
shall deposit an amount equal to $2,966,064 in such Reserve Account, which
represents 5.75% of the Original Class A Principal Balance. The Trustee shall
maintain the Reserve Account at the Required Reserve Account Level as described
in Section 6.5 hereof. If the amount in the Reserve Account decreases below the
Required Reserve Account Level, then on the next Remittance Date, the Trustee
shall, to the extent of the Available Funds Excess, transfer from the
Certificate Account the amount described in Section 6.5(a)(vi) and deposit such
amount into the Reserve Account. On any Remittance Date, any amount in the
Reserve Account in excess of the Required Reserve Account Level after the
required distributions described in Sections 6.5(a)(i)-(v) shall be withdrawn
from the Reserve Account and paid to the Holders of the Class R Certificates pro
rata in proportion to their undivided beneficial ownership interest in the REMIC
1995-2. Funds held in the Reserve Account shall be invested in Permitted
Investments at the written direction of the Holders of the Class R Certificates
that mature prior to the Business Day prior to the next Servicer Remittance
Date. No Permitted Investments shall be sold prior to its maturity. The Holders
of the Class R Certificates shall be liable for any losses occurring with
respect to the Permitted Investments held in the Reserve Account.
(b) Not later than two Business Days prior to the Servicer
Remittance Date, the Trustee, based on the information provided to it by the
Servicer pursuant to Section 6.5 hereof, shall determine with respect to the
immediately following Remittance Date the amount to be on deposit in the
Certificate Account (such amount the result of the Servicer's remittance of the
Servicer Remittance Amount) reduced by (x) the sum of the amounts described in
clauses (i) and (ii) of Section 6.5(a) for the related Remittance Date, and
further not including (y) any Insured Payment. The amount described in the
preceding sentence with respect to such Remittance Date, when added to the
amount on deposit in the Reserve Account, is the "Available Amount."
(c) Not later than 12:00 noon New York City time on the
second Business Day preceding each Remittance Date, the Trustee shall, if the
Trustee determines that the Available Amount for the related Remittance Date is
less than the Class A Formula Distribution Amount for such Remittance Date,
complete a Notice in the form of Exhibit A to the Certificate Insurance Policy
and submit such notice to the Certificate Insurer and such notice shall serve as
a claim for an Insured Payment in an amount equal to the Insured Payment due for
and on such Remittance Date. The Insured Payment shall be deposited directly
into the Certificate Account in accordance with the Notice and the Certificate
Insurance Policy.
(d) On the Business Day prior to each Remittance Date, (i)
for which an Insured Payment is required, the Trustee shall withdraw all funds
on deposit in the Reserve Account and deposit such amount in the Certificate
Account and (ii) for which no Insured Payment is required, the Trustee shall
withdraw from the Reserve Account an amount equal to the excess, if any, of the
sum of the amounts referenced in clauses (i), (ii), (iii) and (iv) of Section
6.5(a) over the amounts then on deposit in the Certificate Account and deposit
such amount in the Certificate Account to be used to make distributions to the
Certificateholders on the related Remittance Date.
(e) The Trustee shall keep a complete and accurate record of
the amount of interest and principal paid in respect of any Certificate from
moneys received under the Certificate Insurance Policy. The Certificate Insurer
shall have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's prior notice to the Trustee.
(f) In the event that the Trustee has received a certified
copy of an order of the appropriate court that any amount distributed on the
Class A Certificates, including any amounts represented by an Insured Payment,
has been voided in whole or in part as a preference payment under applicable
bankruptcy law, the Trustee shall so notify the Certificate Insurer, shall
comply with the provisions of the Certificate Insurance Policy to obtain payment
by the Certificate Insurer of such voided amount distributed, and shall, at the
time it provides notice to the Certificate Insurer, notify, by mail to
Certificateholders of the affected Certificates that, in the event any
Certificateholder's amount distributed is so recovered, such Certificateholder
will be entitled to payment pursuant to the Certificate Insurance Policy, a copy
of which shall be made available through the Trustee, the Certificate Insurer or
the Certificate Insurer's fiscal agent, if any, and the Trustee shall furnish to
the Certificate Insurer or its fiscal agent, if any, its records evidencing the
payments which have been made by the Trustee and subsequently recovered from
Certificateholders, and dates on which such payments were made.
(g) The Trustee shall promptly notify the Certificate
Insurer of any proceeding or the institution of any action, of which a
Responsible Officer of the Trustee has actual knowledge, seeking the avoidance
as a preferential transfer under applicable bankruptcy, insolvency, receivership
or similar law (a "Preference Claim") of any distribution made with respect to
the Certificates. Each Certificateholder, by its purchase of Certificates, the
Servicer and the Trustee agree that, the Certificate Insurer (so long as no
Certificate Insurer Default exists) may at any time during the continuation of
any proceeding relating to a Preference Claim direct all matters relating to
such Preference Claim, including, without limitation, (i) the direction of any
appeal of any order relating to such Preference Claim and (ii) the posting of
any surety, supersedeas or performance bond pending any such appeal. In
addition and without limitation of the foregoing, the Certificate Insurer shall
be subrogated to, and each Certificateholder, the Servicer and the Trustee
hereby delegate and assign to the Certificate Insurer, to the fullest extent
permitted by law, the rights of the Servicer, the Trustee and each
Certificateholder in the conduct of any such Preference Claim, including,
without limitation, all rights of any party to any adversary proceeding or
action with respect to any court order issued in connection with any such
Preference Claim.
Section 6.5 Distributions. No later than 12:00 noon California
time on the Determination Date, the Servicer shall deliver to the Trustee and to
the Certificate Insurer a report in computer-readable form specifying (x) the
outstanding Trust Balances and Additional Balances, if any, of each of the
Mortgage Loans as of the last day of the calendar month immediately preceding
the Due Period applicable to such Servicer Remittance Date, (y) such of the
information included in Section 6.7(c) as to the Mortgage Loans as the Trustee
may reasonably require or the Certificate Insurer may reasonably request and (z)
such information as to each Mortgage Loan as of the Record Date immediately
preceding such Servicer Remittance Date and such other information as the
Trustee shall reasonably require or the Certificate Insurer may reasonably
request. The Servicer shall include written direction to the Trustee (with a
copy delivered to the Certificate Insurer) specifying the following information
(which need not be in computer-readable form): (A) each amount to be transferred
by the Trustee from the Trustee Collection Account and/or the Collection Account
(i) to the Certificate Account, including (a) the Servicer Remittance Amount,
(b) the Net Foreclosure Profits (net of any portion payable to the Servicer and
net of the Exchangeable Certificate Allocation portion thereof) and (c) the
Periodic Advances for such Remittance Date; and (ii) to the Exchangeable
Certificate Account(s) or any Additional Certificate Account(s), pursuant to
Section 6.1(f); (B) instructions to the Trustee regarding the amounts to be
withdrawn from the Reserve Account and deposited into the Certificate Account
pursuant to Section 6.4(d) hereof; and (C) instructions to the Trustee
specifying the amounts to be withdrawn from the Certificate Account pursuant to
Section 6.2(a) (including therein an itemization of the amounts to be
distributed pursuant to Section 6.2(a)(i) as specified in Section 6.5(a)(i)-
(vii)) and the amounts to be withdrawn from the Exchangeable Certificate
Account(s) or Additional Certificate Account(s) pursuant to Section 6.2(b)
(including therein an itemization of the amounts to be distributed pursuant to
Section 6.5(b)(i)-(ii)). The information with respect to the Remittance Date
provided by the Servicer to the Trustee and the Certificate Insurer on the
Determination Date shall also include the Class A Formula Distribution Amount,
the Class A Pass-Through Rate, the Weighted Average Rate Cap, the Premium
Percentage, the aggregate Class A Principal Balance, the aggregate sum of the
Trust Balances for all Mortgage Loans and the Required Reserve Account Level.
The Servicer shall also calculate and provide the Available Amount, the
Available Funds Excess, if any, the amount of the Class A Insured Distribution
Amount and any Insured Payment and the amount required to be deposited into the
Reserve Account to bring the amount remaining on deposit in the Reserve Account
(after any withdrawal by the Trustee, and subsequent transfer to the Certificate
Account) equal to the Required Reserve Account Level. Simultaneous with the
delivery of the foregoing information to the Trustee, the Servicer shall provide
the Trustee and the Certificate Insurer with a report including information
specified in each of Sections 6.7(a)(i)-(xi) and in Section 6.7(c)(i)-(vii).
(a) With respect to the Certificate Account (including, if
deposited into the Certificate Account, any withdrawals from the Reserve Account
or any Insured Payments), on each Remittance Date, the Trustee shall make the
following allocations, disbursements and transfers in the following order of
priority, and each such allocation, transfer and disbursement shall be treated
as having occurred only after all preceding allocations, transfers and
disbursements have occurred:
(i) to the Certificate Insurer, the Certificate
Insurance Policy Premium Amount;
(ii) to the Trustee, an amount equal to the Trustee's
Fees then due to it;
(iii) to the Class A Certificateholders an amount
equal to the Class A Interest Distribution Amount;
(iv) to the Class A Certificateholders an amount
equal to the Class A Principal Distribution Amount;
(v) to the Certificate Insurer the lesser of (x) the
excess of (i) the amount in the Certificate Account (excluding Insured Payments)
over (ii) the amount of Insured Payments for such Remittance Date and (y) the
outstanding Reimbursement Amount, if any, as of such Remittance Date;
(vi) to the Reserve Account, an amount equal to the
lesser of (x) any amount then remaining in the Certificate Account after the
applications described in clauses (i) through (v) above (the "Available Funds
Excess") and (y) the amount necessary to bring the amount on deposit in the
Reserve Account to the Required Reserve Account Level; and
(vii) to the Holders of the Class R Certificates, the
amount remaining in the Certificate Account on such Remittance Date, if any.
(b) With respect to the Exchangeable Certificate Account, on
each Remittance Date, the Trustee shall make the following disbursements and
transfers in the following order of priority, and each such disbursement or
transfer shall be treated as having occurred only after all preceding
disbursements and transfers have occurred:
(i) to the Trustee Collection Account, the amount on
deposit in the Exchangeable Certificate Account representing any amount not
required to be deposited in the Exchangeable Certificate Account;
(ii) to the Servicer, any amounts representing
interest earned on or investment income earned with respect to funds on deposit
in the Exchangeable Certificate Account; and
(iii) to or upon the direction of the Holder(s) of the
Exchangeable Certificate(s) and the Additional Certificate(s), the corresponding
Percentage Interest of each such certificate of the amount remaining on deposit
on such Remittance Date in the Exchangeable Certificate Account after each of
the foregoing distributions have occurred.
Notwithstanding the foregoing, the aggregate amounts distributed on all
Remittance Dates to the Holders of the Class A Certificates on account of
principal shall not exceed the Original Class A Principal Balance. Any amount
payable to the Additional Certificates and the Exchangeable Certificate from the
Exchangeable Certificate Account shall, to the extent not herein described, be
determined by the applicable Supplement.
Section 6.6 Investment of Accounts. (a) So long as no Event
of Default shall have occurred and be continuing, and consistent with any
requirements of the Code, all or a portion of any Account (other than the
Reserve Account) held by the Trustee shall be invested and reinvested by the
Trustee, as directed in writing by the Servicer, in one or more Permitted
Investments bearing interest or sold at a discount. If an Event of Default
shall have occurred and be continuing or if the Servicer does not provide
investment directions, the Trustee shall invest all Accounts in Permitted
Investments described in paragraph (d) of the definition of Permitted
Investments. No such investment in any Account shall mature later than the
Business Day immediately preceding the next Remittance Date (except that if such
Permitted Investment is an obligation of the Trustee, then such Permitted
Investment shall mature not later than such Remittance Date). Notwithstanding
anything to the contrary in this Section 6.6(a), all amounts received under the
Certificate Insurance Policy shall remain uninvested.
(b) If any amounts are needed for disbursement from any
Account (other than the Reserve Account) held by the Trustee and sufficient
uninvested funds are not available to make such disbursement, the Trustee shall
cause to be sold or otherwise converted to cash a sufficient amount of the
investments in such Account. The Trustee shall not be liable for any investment
loss or other charge resulting therefrom unless the Trustee's failure to perform
in accordance with this Section 6.6 is the cause of such loss or charge or the
Trustee is the obligor of the related investment.
(c) Subject to Section 9.1 hereof, the Trustee shall not in
any way be held liable by reason of any insufficiency in any Account held by the
Trustee resulting from any investment loss on any Permitted Investment included
therein (except as provided in subsection (b) of this Section 6.6).
(d) So long as no Event of Default shall have occurred and
be continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in any Account (excluding the Reserve Account)
shall be for the benefit of the Servicer as servicing compensation (in addition
to the Servicing Fee). The Servicer shall deposit in the related Account the
amount of any loss incurred in respect of any Permitted Investment held therein
which is in excess of the income and gain thereon immediately upon realization
of such loss, without any right to reimbursement therefor from its own funds.
Section 6.7 Reports by Trustee. (a) On each Remittance Date
the Trustee shall, based on a report delivered to it by the Servicer on the
Determination Date, as described in Section 6.5 hereof, provide to each Holder,
to the Certificate Insurer, to the Underwriter, to the Depositor, to the
Servicer, to S&P and to Moody's a written report (the "Trustee Remittance
Report"), setting forth information including, without limitation, the following
information:
(i) the amount of the distributions made on such
Remittance Date with respect to the Class A Certificates, the Class R
Certificates, the Exchangeable Certificate and any Additional Certificates,
including whether such distributions were made to the holder of the
corresponding certificate, or to an account held by the Trust for the benefit of
such corresponding certificate;
(ii) the amount of such distributions allocable to
principal, separately identifying the aggregate amount of any Prepayments or
other unscheduled recoveries of principal included therein;
(iii) the amount of such distributions allocable to
interest and the calculation thereof;
(iv) the amount of any Net Liquidation Proceeds
included in such distributions and the calculation thereof;
(v) the principal amount of the Class A Certificates
(based on a Certificate in an original principal amount of $1,000) then
outstanding, and the outstanding amount of the Trust Balances and the Additional
Balances, in each case after giving effect to any principal payments made on
such Remittance Date;
(vi) the amount of any Insured Payment included in
the amounts distributed to the Class A Certificateholders on such Remittance
Date;
(vii) the amount of any Available Funds Excess and any
Deficiency Amount on such Remittance Date;
(viii) the amount of any Class A Insured Distribution
Amount withdrawn from the Reserve Account on such Remittance Date;
(ix) the amount then on deposit in the Reserve
Account on such Remittance Date, together with the current Required Reserve
Account Level (indicating the calculation for each in such report);
(x) the total of any Substitution Adjustments and
any Loan Repurchase Price amounts included in each such distribution; and
(xi) the amounts, if any, of any Liquidation Loan
Losses for the related Due Period.
Items (i), (ii) and (iii) above shall, with respect to the Class A Certificates,
be presented on the basis of a Certificate having a $1,000 denomination. In
addition, by January 31 of each calendar year following any year during which
the Certificates are outstanding, the Trustee shall furnish a report to each
Holder of record if so requested in writing at any time during each calendar
year as to the aggregate of amounts reported pursuant to (i), (ii) and (iii)
with respect to the Certificates for such calendar year.
(b) All distributions made to the Certificateholders
according to Class or type of Certificate on each Remittance Date will be made
on a pro rata basis among the Certificateholders as of the next preceding Record
Date based on the proportional beneficial ownership interest in the related
REMIC as are represented by their respective Certificates, and shall be made by
wire transfer of immediately available funds to the account of such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if, in the case of a Class A Certificateholder, such Certificateholder
shall own of record Certificates of the same Class which have denominations
aggregating at least $5,000,000 appearing in the Certificate Register and shall
have provided complete wiring instructions at least five Business Days prior to
the Record Date, and otherwise by check mailed to the address of such
Certificateholder appearing in the Certificate Register.
(c) In addition, on each Remittance Date the Trustee will
distribute to each Holder, to the Certificate Insurer, to the Underwriter, to
the Depositor, to S&P and to Moody's, together with the information described in
subsection (a) preceding, the following information with respect to the Mortgage
Loans as of the close of business on the last Business Day of the prior calendar
month (except as otherwise provided in clause (v) below), which is hereby
required to be prepared by the Servicer and furnished to the Trustee for such
purpose on or prior to the related Servicer Remittance Date:
(i) the total number of Mortgage Loans and the aggregate
Trust Balances and Additional Balances, if any, thereof, together with the
number, aggregate principal balances of such Mortgage Loans and the percentage
(based on the aggregate Trust Balances of the Mortgage Loans) of the aggregate
Trust Balances of such Mortgage Loans to the aggregate Trust Balance of all
Mortgage Loans (A) 30-59 days Delinquent, (B) 60-89 days Delinquent and (C) 90
or more days Delinquent;
(ii) the number, aggregate Trust Balances of all Mortgage
Loans and percentage (based on the aggregate Trust Balances of the Mortgage
Loans) of the aggregate Trust Balances of such Mortgage Loans to the aggregate
Trust Balance of all Mortgage Loans in foreclosure proceedings and the number,
aggregate Trust Balances of all Mortgage Loans and percentage (based on the
aggregate Trust Balances of the Mortgage Loans) of any such Mortgage Loans are
also included in any of the statistics described in the foregoing clause (i);
(iii) the number, aggregate Trust Balances of all Mortgage
Loans and percentage (based on the aggregate Trust Balances of the Mortgage
Loans) of the aggregate Trust Balances of such Mortgage Loans to the aggregate
Trust Balance of all Mortgage Loans relating to Mortgagors in bankruptcy
proceedings and the number, aggregate Trust Balances of all Mortgage Loans and
percentage (based on the aggregate Trust Balances of the Mortgage Loans) of any
such Mortgage Loans are also included in any of the statistics described in the
foregoing clause (i);
(iv) the number, aggregate Trust Balances of all Mortgage
Loans and percentage (based on the aggregate Trust Balances of the Mortgage
Loans) of the aggregate Trust Balances of such Mortgage Loans to the aggregate
Trust Balance of all REO Mortgage Loans and the number, aggregate Trust Balances
of all Mortgage Loans and percentage (based on the aggregate Trust Balances of
the Mortgage Loans) of any such Mortgage Loans that are also included in any of
the statistics described in the foregoing clause (i);
(v) the weighted average Mortgage Interest Rate and the Net
Mortgage Interest Rate as of the Due Date occurring in the Due Period related to
such Remittance Date;
(vi) the weighted average remaining term to stated maturity
of all Mortgage Loans; and
(vii) the book value of any REO Property.
Section 6.8 Additional Reports by Trustee and by Servicer. (a)
The Trustee shall report to the Depositor, the Servicer and the Certificate
Insurer with respect to the amount then held in each Account (including
investment earnings accrued or scheduled to accrue) held by the Trustee and the
identity of the investments included therein, as the Depositor, the Servicer or
the Certificate Insurer may from time to time request in writing.
(b) From time to time, at the request of the Certificate
Insurer, the Trustee shall report to the Certificate Insurer with respect to its
actual knowledge, without independent investigation, of any breach of any of the
representations or warranties relating to individual Mortgage Loans set forth in
any Purchase and Sale Agreement or in Section 3.1 or 3.2 hereof.
(c) On a monthly basis, for so long as the Certificate
Insurer shall so require, the Servicer shall deliver to the Trustee a monthly
report (which shall be on computer readable magnetic tape or disk) which shall
include information regarding the individual Mortgage Loans and such summary
information as the Trustee shall reasonably require in order to provide for a
transition of servicing obligations to the Successor Servicer.
Section 6.9 Compensating Interest. Not later than the close of
business on the third Business Day prior to the Remittance Date, the Servicer
shall remit to the Trustee (without right or reimbursement therefor) for deposit
into the Certificate Account an amount equal to the lesser of (a) the aggregate
of the Prepayment Interest Shortfalls for the related Remittance Date resulting
from Principal Prepayments during the related Due Period and (b) its aggregate
Servicing Fees received in the related Due Period (the "Compensating Interest").
Section 6.10 Effect of Payments by the Certificate Insurer;
Subrogation. Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Certificates which is made with
moneys received pursuant to the terms of the Certificate Insurance Policy shall
not be considered payment of the Certificates from the Trust Fund. The
Depositor, the Servicer and the Trustee acknowledge, and each Holder by its
acceptance of a Certificate agrees, that without the need for any further action
on the part of the Certificate Insurer, the Depositor, the Servicer, the Trustee
or the Certificate Registrar (i) to the extent the Certificate Insurer makes
payments, directly or indirectly, on account of principal of or interest on the
Certificates to the Holders of such Certificates, the Certificate Insurer will
be fully subrogated to, and each Certificateholder, the Servicer and the Trustee
hereby delegate and assign to the Certificate Insurer, to the fullest extent
permitted by law, the rights of such Holders to receive such principal and
interest from the Trust Fund, including, without limitation, any amounts due to
the Certificateholders in respect of securities law violations arising from the
offer and sale of the Certificates, and (ii) the Certificate Insurer shall be
paid such amounts but only from the sources and in the manner provided herein
for the payment of such amounts. The Trustee and the Servicer shall cooperate
in all respects with any reasonable request by the Certificate Insurer for
action to preserve or enforce the Certificate Insurer's rights or interests
under this Agreement without limiting the rights or affecting the interests of
the Holders as otherwise set forth herein.
Section 6.11 Exchanges; Tender of Exchangeable Certificate.
Except as otherwise provided in an applicable Supplement,
Exchangeable Certificates issued hereunder may only be exchanged in accordance
with the terms of Section 4.2 and this Section 6.11.
(a) Any Holder of an Exchangeable Certificate may direct the
Trustee to issue one or more new or reissued Exchangeable Certificates and/or
Additional Certificates by notifying the Trustee (and, in the case of any
Exchange whereby Additional Certificates are issued, the Certificate Insurer),
in writing at least five days in advance (an "Exchange Notice") of the date (an
"Exchange Date") upon which the issuance is to occur (an "Exchange"). Any
Exchange Notice shall specify the number of new Exchangeable Certificates, if
any, to be issued and the number of Additional Certificates, if any, to be
issued on such Exchange Date and shall specify the portion of the Exchangeable
Certificate Allocation and other rights to which the Holder of the Exchangeable
Certificate would otherwise be entitled to receive in respect of such
Exchangeable Certificate which should be allocated to the new Exchangeable
Certificates and/or Additional Certificates, as the case may be.
(b) In the event more than one Exchangeable Certificates are to
be issued, the Trustee shall cancel the Exchangeable Certificate subject to the
Exchange and issue two or more Exchangeable Certificates having the allocations
of the Exchangeable Certificate Allocation specified in the Exchange Notice and
shall establish Exchangeable Certificate Accounts for each such Exchangeable
Certificate. There is no limit to the number of Exchanges that may be performed
under the Agreement.
(c) In the event that Additional Certificates are to be issued,
the Trustee and the Holder of the Exchangeable Certificate subject to the
exchange shall execute a Supplement to this Agreement and such new Series of
Additional Certificates shall be substantially in the form specified in the
related Supplement and shall bear, upon its face, the designation for such
Series to which it belongs, as selected by such Holder. Such Supplement shall
specify (i) the designation of any Series of Additional Certificates to be
issued on the Exchange Date; (ii) the method of allocating Collections or other
funds or assets to which such Series is entitled among holders of such Series'
certificates; (iii) the closing date, (iv) the rating agency or agencies, if
any, rating such Series, (v) the name of any applicable clearing agency, (vi)
any applicable interest payment date or dates and the date or dates from which
any such interest shall accrue, (vii) the names of any new accounts to be used
by such Series and the terms governing the operation of any such account, (viii)
the terms of any credit enhancement with respect to such new Series, if any,
(ix) the credit enhancement provider, if applicable, (x) any deposit into any
account provided for such new Series, (xi) the number of Classes of such new
Series, and if more than one Class, the rights and priorities of each such
Class, (xiii) the voting rights of the Holders of such new Series, which shall,
to the extent such Holder is a Person other than the Seller or the Servicer,
provide that such Holder shall have the right to vote on any matter affecting
the collateral for such new Series that may adversely affect such Holder's
interest to the extent of any voting rights previously allocated to the
Exchangeable Certificate and any Additional Certificates exchanged in connection
with the issuance of such new Series, and shall further provide, unless
otherwise provided herein, that the rights of any Holder of any new Series to
vote on, or provide consent with respect to, any amendment of the terms and
provisions of this Agreement otherwise requiring the vote or consent of all
Certificateholders shall, to the extent such amendment affects the interest of
the Holders of all Series, be equal to the rights of a Holder of any other
Series, and (xiv) any other relevant terms of such Series (including whether or
not such Series will be pledged as collateral for an issuance of any other
securities, including commercial paper). Unless otherwise agreed by the
Certificate Insurer, no Additional Certificates shall have the benefit of the
Certificate Insurance Policy. On the Exchange Date, the Trustee shall
authenticate and deliver any such Series of Additional Certificates only upon
delivery to it of the following: (i) a Supplement satisfying the criteria set
forth in subsection (c) hereof, executed by the Holder of the Exchangeable
Certificate subject to the exchange and specifying the principal terms of such
Series as described in subsection (c) hereof, (ii) an Opinion of Counsel
addressed to the Trustee and to the Certificate Insurer to the effect that (1)
if the newly issued Series of Additional Certificates are to be transferred to a
new REMIC of the Trust Fund, the Trustee will elect to treat it as a REMIC for
Federal income tax purposes (or as a comparable federal income tax structure),
and (2) that the issuance of the newly issued Series of Additional Certificates
will not adversely affect the Federal income tax characterization of either any
outstanding Certificates or any outstanding Additional Certificates, or the
Trust Fund (iii) written confirmation from each Rating Agency that the Exchange
will not result in such Rating Agency's reducing or withdrawing its rating on
any then outstanding Series (without regard to the Certificate Insurance Policy
or any other credit enhancement), (iv) an Officer's Certificate of the Servicer
and of the Seller affirming those representations and warranties contained in
the Purchase and Sale Agreement made with respect to the Mortgage Loans related
to the Additional Balances the interests in which serve as the collateral for
the new Series of Additional Certificates issued in connection with such
Exchange or such other representations and warranties substantially similar
thereto, (v) a revised Mortgage Loan Schedule for each Mortgage Loan the
Additional Balance of which serves as the collateral for any Additional
Certificate of a new Series issued in connection with such Exchange indicating,
in addition to such information otherwise provided thereon, the number of such
Mortgage Loan and, in the case of Additional Balances the interest in which is
represented by such Additional Certificate, the amount of such Additional
Balance as of the date of such Exchange, (vi) the existing Exchangeable
Certificate and (vii) the consent of the Certificate Insurer, which shall not be
unreasonably withheld. Upon satisfaction of such conditions, the Trustee shall
cancel the existing Exchangeable Certificate and issue, as provided above, such
new Series of Additional Certificates and a new Exchangeable Certificate, dated
the Exchange Date. There is no limit to the number of Exchanges that may be
performed under the Agreement.
(d) In the event that a single exchange relates to both the
issuance of two or more Exchangeable Certificates and Additional Certificates,
the provisions of paragraph (b) of this Section 6.11 governs the issuance of the
Exchangeable Certificates and the provisions of paragraph (c) of this Section
6.11 governs the issuance of the Additional Certificates.
(e) In connection with any Exchange whereby new mortgage loans
are to be added to the Trust Fund, (each, an "Additional Mortgage Loan") whether
as consideration for a new Series of Certificates, or in connection with any
repurchase or substitution of one or more Mortgage Loans the Additional Balances
of which are represented by any exchanged or issued certificate, the Supplement
related to any such Series shall specifically provide for the conveyance of, and
the terms and conditions precedent to any such conveyance of, such Additional
Mortgage Loans originated by Irwin Union Bank and Trust Company or any of its
affiliates and conveyed to the Trust Fund by the Depositor. Effective upon any
conveyance of an Additional Mortgage Loan to the Trustee, the owner of such
Additional Mortgage Loan shall, and, if such owner is the Seller or the
Depositor, each of the Seller and the Depositor does hereby grant, irrevocably
assign, transfer and set over to the Trustee all of such owner's right, title
and interest in, to and under such Additional Mortgage Loan. Concurrently with
any such conveyance of Additional Mortgage Loans to the Trust Fund, all related
mortgage loan schedules, files and other assets delivered in connection with
such conveyance (all of which shall thereafter be deemed the assets of, and
incorporated in the definition of, the Trust Fund and for the purposes of this
subsection be deemed the "additional assets of the Trust Fund"), the Trustee
shall acknowledge the assignment to it of such additional assets of the Trust
Fund and shall execute, authenticate and deliver to or upon the order of the
Depositor, in exchange therefor, such new certificates duly authenticated by the
Trustee in Authorized Denominations evidencing the entire beneficial ownership
interest in such additional assets of the Trust Fund.
(f) Notwithstanding anything in this Section 6.11 to the
contrary, (i) all representations and warranties of the Servicer and of the
Seller made or affirmed herein, in the Mortgage Loan Sale Agreement or the
Purchase and Sale Agreement with respect to any of the Mortgage Loans related to
the Additional Balances serving as the collateral for any new Series of
Additional Certificates issued in connection with an Exchange shall be deemed to
have been made as of the date of any such issuance, and the Servicer and the
Seller hereby affirm that such representations and warranties shall be true and
correct with respect to each such Mortgage Loan as of the date of such issuance,
(ii) to the extent any such new Series represent interests in Additional
Mortgage Loans, the Seller and Servicer shall provide representations and
warranties substantially similar to the representations and warranties of the
Seller and of the Servicer heretofore made or affirmed in this Agreement, the
Mortgage Loan Sale Agreement and the Purchase and Sale Agreement with respect to
the Mortgage Loans conveyed in connection with this Agreement to the Trust Fund
and each of the Seller and Servicer hereby affirm that all such representations
and warranties shall be true and correct as of the date of issuance of such new
Series and (iii) the Seller shall provide (1) a Mortgage Loan Schedule for each
such Additional Mortgage Loan the interest in which is represented by the new
Series issued in consideration of such conveyance indicating thereon the
principal amount, and any Additional Balance of, such Additional Mortgage Loan
as of the date of such conveyance, and (2) one or more revised Mortgage Loan
Schedules for each Mortgage Loan related to the Additional Balance the interest
in which serves as collateral for the new Series or for the new Series and the
reissued Exchangeable Certificate, indicating thereon, in addition to the
information otherwise provided in the Mortgage Loan Schedule, the amount of any
Additional Balance serving as collateral for the new Series, and with respect to
the reissued Exchangeable Certificate, the indication as to which Series shall
hold the interest of any existing Additional Balance or Additional Balances,
together with the date after which any Additional Balance shall be allocated to
the interest of the reissued Exchangeable Certificate.
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ARTICLE VII
Default
Section 7.1 Events of Default. (a) In case one or more of the
following Events of Default by the Servicer shall occur and be continuing, that
is to say:
(i) any failure by the Servicer to remit to the Trustee any
payment required to be made by the Servicer under the terms of this Agreement;
(ii) the failure by the Servicer to make any required
Servicing Advance or Periodic Advance;
(iii) any failure on the part of the Servicer duly to observe
or perform in any material respect any other of the covenants or agreements on
the part of the Servicer contained in this Agreement, or the failure of any
representation and warranty made pursuant to Section 3.1 to be true and correct
which 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, as the case may be, by the Depositor or the Trustee
or to the Servicer and the Trustee by any Certificateholder or the Certificate
Insurer;
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or for the appointment of
a conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Servicer and such decree or order shall have remained in force, undischarged or
unstayed for a period of 60 days;
(v) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Servicer or of or relating to all or substantially all of the Servicer's
property;
(vi) the Servicer shall admit in writing its inability to pay
its debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations;
(vii) with respect to the litigation initiated by Providian
Bancorp, Inc. against the Servicer as described in the Prospectus Supplement, a
final nonappealable judgment or ruling is entered by a court of competent
jurisdiction, or a settlement is agreed to by the Servicer, which is materially
adverse to the operation of the Servicer's business or its ability to perform
its obligations hereunder;
(viii) as of any Remittance Date prior to the 60th Remittance
Date, Total Expected Losses exceed 9% of the aggregate Principal Balance of the
Mortgage Loans;
(ix) as of any Remittance Date following the 60th Remittance
Date but prior to the 120th Remittance Date, Total Expected Losses exceed 13.5%
of the aggregate Principal Balance of the Mortgage Loans;
(b) then, and in each and every such case, so long as an
Event of Default shall not have been remedied with respect to (i) - (ix) above,
the Trustee shall, but only at the direction of the Certificate Insurer or the
Majority Certificateholders with the consent of the Certificate Insurer, by
notice in writing to the Servicer and a Responsible Officer of the Trustee, (x)
remove the Servicer, and in the case of any removal at the direction of the
Majority Certificateholders, and in addition to whatever rights such
Certificateholders may have at law or equity to damages, including injunctive
relief and specific performance, (y) terminate all the rights and obligations of
the Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof, as servicer; and (z) with respect to clauses (vii) through
(ix) above, the Trustee shall, but only at the direction of the Certificate
Insurer, after notice in writing to the Servicer and a Responsible Officer of
the Trustee, terminate all the rights and obligations of the Servicer under this
Agreement and in and to the Mortgage Loans and the proceeds thereof, as
Servicer. Upon receipt by the Servicer of such written notice, all authority
and power of the Servicer under this Agreement, whether with respect to the
Mortgage Loans or otherwise, shall, subject to Section 7.2, pass to and be
vested in the Trustee or its designee approved by the Certificate Insurer and
the Trustee is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, at the expense of the
Servicer, any and all documents and other instruments and do or cause to be done
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, including, but not limited to, the transfer and
endorsement or assignment of the Mortgage Loans and related documents. The
Servicer agrees to cooperate (and pay any related costs and expenses) with the
Trustee in effecting the termination of the Servicer's responsibilities and
rights hereunder, including, without limitation, the transfer to the Trustee or
its designee for administration by it of all amounts which shall at the time be
credited by the Servicer to the Collection Account or thereafter received with
respect to the Mortgage Loans. The Trustee shall promptly notify the Certificate
Insurer, Moody's and S&P upon receiving notice of, or its discovery of, the
occurrence of an Event of Default.
Section 7.2 Trustee to Act; Appointment of Successor. (a) On
and after the time the Servicer receives a notice of termination pursuant to
Section 7.1, or the Trustee receives the resignation of the Servicer evidenced
by an Opinion of Counsel pursuant to Section 5.24, or the Servicer is removed as
Servicer pursuant to Article VII, in which event the Trustee shall promptly
notify Moody's and S&P, except as otherwise provided in Section 7.1, 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
arising on or after the date of succession; provided, however, that the Trustee
shall not be liable for any actions or the representations and warranties of any
servicer prior to it and including, without limitation, the obligations of the
Servicer set forth in Sections 2.4 and 3.3. The Trustee, as Successor Servicer,
or any other successor servicer shall be obligated to pay Compensating Interest
pursuant to Section 6.9 hereof; the Trustee, as Successor Servicer is obligated
to make advances pursuant to Section 5.21 unless, and only to the extent the
Trustee, as Successor Servicer determines reasonably and in good faith that such
advances would not be recoverable pursuant to Sections 5.4(b), 5.4(g) or 5.4(j),
such determination to be evidenced by a certification of a Responsible Officer
of the Trustee, as Successor Servicer delivered to the Certificate Insurer.
(b) 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 Majority
Certificateholders with the consent of the Certificate Insurer or the
Certificate Insurer so requests in writing to the Trustee, appoint, pursuant to
the provisions set forth in paragraph (c) below, or petition a court of
competent jurisdiction to appoint, any established mortgage loan servicing
institution acceptable to the Certificate Insurer that has a net worth of not
less than $15,000,000 as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer hereunder.
(c) In the event the Trustee is the successor servicer, it
shall be entitled to the Servicing Compensation (including the Servicing Fee as
adjusted pursuant to the definition thereof) and other funds pursuant to Section
5.14 hereof as the Servicer if the Servicer had continued to act as servicer
hereunder. In the event the Trustee is unable or unwilling to act as successor
servicer, the Trustee shall solicit, by public announcement, bids from housing
and home finance institutions, banks and mortgage servicing institutions meeting
the qualifications set forth above. Such public announcement shall specify that
the successor servicer shall be entitled to the full amount of the aggregate
Servicing Fees hereunder as servicing compensation, together with the other
Servicing Compensation. Within thirty 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 to the Servicer in respect of such
sale, transfer and assignment all costs and expenses of any public announcement
and of any sale, transfer and assignment of the servicing rights and
responsibilities hereunder and the amount of any unreimbursed Servicing Advances
and Periodic Advances owed to the Trustee. 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 Servicer's successor.
(d) The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Servicer agrees to cooperate with the 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, at the Servicer's cost and expense, all
documents and records reasonably requested by it to enable it to assume the
Servicer's functions hereunder and shall promptly also transfer to the Trustee
or such successor servicer, as applicable, all amounts that then have been or
should have been deposited in the Collection Account by the Servicer or that are
thereafter received with respect to the Mortgage Loans. Any collections
received by the Servicer after such removal or resignation shall be endorsed by
it to the Trustee and remitted directly to the Trustee or, at the direction of
the Trustee, to the successor servicer. 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 to the Servicer hereunder shall be effective until the Trustee and the
Certificate Insurer shall have consented thereto, and written notice of such
proposed appointment shall have been provided by the Trustee to the Certificate
Insurer and to each Certificateholder. The Trustee shall not resign as servicer
until a successor servicer reasonably acceptable to the Certificate Insurer has
been appointed.
(e) Pending appointment of a successor to the Servicer
hereunder, the Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer pursuant to
Section 5.14, together with other Servicing Compensation. The Servicer, the
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
Section 7.3 Waiver of Defaults. The Majority
Certificateholders may, on behalf of all Certificateholders, and subject to the
consent of the Certificate Insurer, waive any events permitting removal of the
Servicer as servicer pursuant to this Article VII; provided, however, that the
Majority Certificateholders may not waive a default in making a required
distribution on a Certificate without the consent of the holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to
any subsequent or other default or impair any right consequent thereto except to
the extent expressly so waived. Notice of any such waiver shall be given by the
Trustee to S&P and Moody's.
Section 7.4 Mortgage Loans, Trust Fund and Accounts Held for
Benefit of the Certificate Insurer. (a) The Trustee shall hold the Trust Fund
and the Mortgage Files for the benefit of the Certificateholders and the
Certificate Insurer and all references in this Agreement and in the Certificates
to the benefit of Holders of the Certificates shall be deemed to include the
Certificate Insurer. The Trustee shall cooperate in all reasonable respects
with any reasonable request by the Certificate Insurer for action to preserve or
enforce the Certificate Insurer's rights or interests under this Agreement and
the Certificates unless, as stated in an Opinion of Counsel addressed to the
Trustee and the Certificate Insurer, such action is adverse to the interests of
the Certificateholders or diminishes the rights of the Certificateholders or
imposes additional burdens or restrictions on the Certificateholders.
(b) The Servicer hereby acknowledges and agrees that it
shall service the Mortgage Loans for the benefit of the Certificateholders and
for the benefit of the Certificate Insurer, and all references in this Agreement
to the benefit of or actions on behalf of the Certificateholders shall be deemed
to include the Certificate Insurer.
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ARTICLE VIII
Termination
Section 8.1 Termination. (a) Subject to Section 8.2, this
Agreement shall terminate upon notice to the Trustee of either: (i) the later
of the distribution to Certificateholders of the final payment or collection
with respect to the last Mortgage Loan (or Periodic Advances of same by the
Servicer), or the disposition of all funds with respect to the last Mortgage
Loan and the remittance of all funds due hereunder and the payment of all
amounts due and payable to the Certificate Insurer and the Trustee or (ii)
mutual consent of the Servicer, the Certificate Insurer and all
Certificateholders in writing; provided, however, that in no event shall the
Trust established by this Agreement terminate later than twenty-one years after
the death of the last survivor of the descendants of John D. Rockefeller, alive
as of the date hereof.
(b) In addition, subject to Section 8.2, the Servicer may,
at its option and at its sole cost and expense (or, if the Servicer does not
exercise this option, the Certificate Insurer may, at its sole cost and
expense), terminate either the Trust Fund or the REMIC 1995-2 on any date on
which the Class A Principal Balance is less than 10% of the Original Class A
Principal Balance by purchasing, on the next succeeding Remittance Date, all of
the outstanding Mortgage Loans and REO Properties at a price equal to the sum of
(i) the greater of (A) 100% of the Trust Balance of each outstanding Mortgage
Loan and each REO Mortgage Loan, and (B) the fair market value (disregarding
accrued interest) of the Mortgage Loans and REO Properties, determined as the
average of three written bids (copies of which shall be delivered to the Trustee
and the Certificate Insurer by the Servicer and the reasonable cost of which may
be deducted from the final purchase price) made by nationally recognized dealers
and based on a valuation process which would be used to value comparable
mortgage loans and REO property, plus (ii) the aggregate amount of accrued and
unpaid interest on the Mortgage Loans through the related due period and 30
days' interest thereon at a rate equal to the Mortgage Interest Rate, in each
case net of the Servicing Fee, plus (iii) any unreimbursed amounts due to the
Certificate Insurer under this Agreement or the Certificate Insurance Agreement
(the "Termination Price"). Any such purchase shall be accomplished by deposit
into the Certificate Account of the Termination Price. No such termination is
permitted without the prior written consent of the Certificate Insurer (i) if it
would result in a draw on the Certificate Insurance Policy, or (ii) unless the
Servicer shall have delivered to the Certificate Insurer an Opinion of Counsel
reasonably satisfactory to the Certificate Insurer stating that no amounts paid
hereunder are subject to recapture as preferential transfers under the United
States Bankruptcy Code, 11 U.S.C. Section Section 101 et seq., as amended.
(c) If on any Remittance Date, the Servicer determines that
there are no outstanding Mortgage Loans and no other funds or assets in the
Trust Fund other than funds in the Certificate Account, the Servicer shall send
a final distribution notice promptly to each such Certificateholder in
accordance with paragraph (d) below.
(d) Notice of any termination, specifying the Remittance
Date upon which the Trust Fund or the REMIC 1995-2 will terminate and the
Certificateholders shall surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Servicer by letter to each of the Certificateholders identified to the Servicer
by the Trustee as the Certificateholders of record as of the most recent Record
Date, and shall be mailed during the month of such final distribution before the
Servicer Remittance Date in such month, specifying (i) the Remittance Date upon
which final payment of the Certificates will be made upon presentation and
surrender of Certificates at the office of the Trustee therein designated, (ii)
the amount of any such final payment and (iii) 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 of the Trustee
therein specified. The Servicer shall give such notice to the Trustee therein
specified. The Servicer shall give such notice to the Trustee at the time such
notice is given to Certificateholders. The obligations of the Certificate
Insurer hereunder shall terminate upon the deposit by the Servicer with the
Trustee of a sum sufficient to purchase all of the Mortgage Loans and REO
Properties as set forth above and when the Class A Principal Balance has been
reduced to zero.
(e) In the event that all of the Certificateholders shall
not surrender their Certificates for cancellation within six months after the
time specified in the above-mentioned written notice, the Servicer 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 six months after the second notice, all of 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 and other assets which remain
subject hereto. If within nine months after the second notice all the
Certificates shall not have been surrendered for cancellation, the Class R
Certificateholders shall be entitled to all unclaimed funds and other assets
which remain subject hereto and the Trustee upon transfer of such funds shall be
discharged of any responsibility for such funds and the Certificateholders shall
look only to the Class R Certificateholders for payment. Such funds shall
remain uninvested.
Section 8.2 Additional Termination Requirements. (a) In the
event that the Servicer exercises its purchase option as provided in Section
8.1, the REMIC 1995-2 shall be terminated in accordance with the following
additional requirements, unless the Trustee has been furnished with an Opinion
of Counsel to the effect that the failure of the REMIC 1995-2 (or of any other
REMIC of the Trust Fund) to comply with the requirements of this Section 8.2
will not (i) result in the imposition of taxes on "prohibited transactions" of
such REMIC as defined in Section 860F of the Code or (ii) cause such REMIC to
fail to qualify as a REMIC at any time that any Class A Certificates are
outstanding:
(i) Within 90 days prior to the final Remittance Date the
Servicer shall adopt and the Trustee shall sign, a plan of complete liquidation
of the REMIC 1995-2 (or the applicable REMIC of the Trust Fund) meeting the
requirements of a "Qualified Liquidation" under Section 860F of the Code and any
regulations thereunder;
(ii) At or after the time of adoption of such a plan of
complete liquidation, which plan shall include a description of the method for
such liquidation and the price to be conveyed for all of the assets of the REMIC
1995-2 at the time of such liquidation, and at or prior to the final Remittance
Date, the Trustee shall sell all of the assets of the REMIC 1995-2 (or the
applicable REMIC of the Trust Fund) to the Servicer for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be distributed
or credited (A) to the Class A Certificateholders the Class A Principal Balance,
plus one month's interest thereon at the Class A Pass-Through Rate, and (B) to
the Class R Certificateholders, all of such REMIC's cash on hand after such
payment to the Class A Certificateholders (other than cash retained to meet
claims) and the REMIC 1995-2 shall terminate at such time.
(b) By their acceptance of the Certificates, the Holders
thereof hereby agree to appoint the Servicer as their attorney in fact to: (i)
adopt such a plan of complete liquidation (and the Certificateholders hereby
appoint the Trustee as their attorney in fact to sign such plan) as appropriate
or upon the written request of the Certificate Insurer and (ii) to take such
other action in connection therewith as may be reasonably required to carry out
such plan of complete liquidation all in accordance with the terms hereof.
Section 8.3 Accounting Upon Termination of Servicer. Upon
termination of the Servicer, the Servicer shall, at its expense:
(a) deliver to its successor or, if none shall yet have been
appointed, to the Trustee, the funds in any Account;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Trustee all Mortgage Files and related documents and
statements held by it hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Trustee and, upon request, to the Certificateholders a full
accounting of all funds, including a statement showing the Monthly Payments
collected by it and a statement of monies held in trust by it for the payments
or charges with respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all
acts reasonably requested in order to effect the orderly and efficient transfer
of servicing of the Mortgage Loans to its successor and to more fully and
definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the "Servicer" under this
Agreement.
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ARTICLE IX
The Trustee
Section 9.1 Duties of Trustee. (a) 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 and has not been cured or waived, 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 its exercise as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs.
(b) 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 conform on their face to the requirements of this
Agreement; provided, however, that the Trustee shall not be responsible for the
accuracy or content of any resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by the Servicer or the Seller
hereunder. If any such instrument is found not to conform on its face to the
requirements of this Agreement, the Trustee shall take action as it deems
appropriate to have the instrument corrected and, if the instrument is not
corrected to the Trustee's satisfaction, the Trustee will, at the expense of the
Servicer notify the Certificate Insurer and request written instructions as to
the action it deems appropriate to have the instrument corrected, and if the
instrument is not so corrected, the Trustee will provide notice thereof to the
Certificate Insurer who shall then direct the Trustee as to the action, if any,
to be taken.
(c) 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 willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and
after the curing of all such Events of Default which may have occurred, the
duties and obligations of the 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 and conforming to the requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or other officers of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer or with the consent of
the Certificate Insurer, the Class A Certificateholders holding Class A
Certificates evidencing Percentage Interests of at least 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;
(iv) The Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any default or Event of Default (except an
Event of Default with respect to the nonpayment of any amount described in
Section 7.1(a), unless a Responsible Officer of the Trustee shall have received
written notice thereof. In the absence of receipt of such notice, the Trustee
may conclusively assume that there is no default or Event of Default (except a
failure to make a Periodic Advance);
(v) The Trustee shall not be required to expend or risk its
own funds or otherwise incur financial liability for the performance of any of
its duties hereunder or the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of 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; and
(vi) Subject to the other provisions of this Agreement and
without limiting the generality of this Section, the Trustee shall have no duty
(A) to see to any recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance of any
such recording or filing or depositing or to any rerecording, refiling or
redepositing of any thereof, (B) to see to any insurance, (C) to see to the
payment or discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust, the Trust Fund, the Certificateholders or the
Mortgage Loans, (D) to confirm or verify the contents of any reports or
certificates of the Servicer delivered to the Trustee pursuant to this Agreement
believed by the Trustee to be genuine and to have been signed or presented by
the proper party or parties.
(d) It is intended that the REMIC 1995-2 formed hereunder shall
constitute, and that the affairs of the REMIC 1995-2 shall be conducted so as to
qualify it as, a REMIC as defined in and in accordance with the REMIC
Provisions. In furtherance of such intention, the Trustee covenants and agrees
that it shall act as agent (and the Trustee is hereby appointed to act as agent)
and as Tax Matters Person on behalf of the REMIC 1995-2, and that in such
capacities it shall:
(i) prepare, sign and file, or cause to be prepared and
filed, in a timely manner, a U.S. Real Estate Mortgage Investment Conduit Income
Tax Return (Form 1066) and any other Tax Return required to be filed by the
REMIC 1995-2, using a calendar year as the taxable year for the REMIC 1995-2;
(ii) make, or cause to be made, an election, on behalf of the
REMIC 1995-2, to be treated as a REMIC on the federal tax return of the REMIC
1995-2 for its first taxable year;
(iii) prepare and forward, or cause to be prepared and
forwarded, to the Trustee, the Certificateholders and to the Internal Revenue
Service and any other relevant governmental taxing authority all information
returns or reports as and when required to be provided to them in accordance
with the REMIC Provisions;
(iv) to the extent that the affairs of the REMIC 1995-2 are
within its control, conduct such affairs of the REMIC 1995-2 at all times that
any Certificates are outstanding so as to maintain the status of the REMIC 1995-
2 as a REMIC under the REMIC Provisions and any other applicable federal, state
and local laws, including, without limitation, information reports relating to
"original issue discount," as defined in the Code, based upon the Prepayment
Assumption and calculated by using the issue price of the Certificates;
(v) not knowingly or intentionally take any action or omit
to take any action that would cause the termination of the REMIC status of the
REMIC 1995-2;
(vi) pay the amount of any and all federal, state, and local
taxes imposed on the Trust Fund, prohibited transaction taxes as defined in
Section 860F of the Code, other than any amount due as a result of a transfer or
attempted or purported transfer in violation of Section 4.2, imposed on the
Trust Fund when and as the same shall be due and payable (but such obligation
shall not prevent the Trustee or any other appropriate Person from contesting
any such tax in appropriate proceedings and shall not prevent the Trustee from
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The Trustee shall be entitled to reimbursement in accordance
with Sections 9.1(c) and 9.5 hereof;
(vii) ensure that any such returns or reports filed on behalf
of the Trust Fund by the Trustee are properly executed by the appropriate person
and submitted in a timely manner;
(viii) represent the Trust Fund in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
the Trust Fund, enter into settlement agreements with any governmental taxing
agency, extend any statute of limitations relating to any item of the Trust Fund
and otherwise act on behalf of the Trust Fund in relation to any tax matter
involving the Trust Fund;
(ix) as provided in Section 5.19 hereof, make available
information necessary for the computation of any tax imposed (1) on transferrers
of residual interests to transferees that are not Permitted Transferees or (2)
on pass-through entities, any interest in which is held by an entity which is
not a Permitted Transferee. The Trustee covenants and agrees that it will
cooperate with the Servicer in the foregoing matters and that it will sign, as
Trustee, any and all Tax Returns required to be filed by the Trust Fund.
Notwithstanding the foregoing, at such time as the Trustee becomes the successor
Servicer, the holder of the largest percentage of the Class R Certificates shall
serve as Tax Matters Person until such time as an entity is appointed to succeed
the Trustee as Servicer;
(x) make available to the Internal Revenue Service and those
Persons specified by the REMIC Provisions all information necessary to compute
any tax imposed (A) as a result of the Transfer of an Ownership Interest in a
Class R Certificate to any Person who is not a Permitted Transferee, including
the information described in Treasury regulations sections 1.860D-1(b)(5) and
1.860E-2(a)(5)with respect to the "excess inclusions" of such Class R
Certificate and (B) as a result of any regulated investment company, real estate
investment trust, common trust fund, partnership, trust, estate or organization
described in Section 1381 of the Code that holds an Ownership Interest in a
Class R Certificate having as among its record holders at any time any Person
that is not a Permitted Transferee. Reasonable compensation for providing such
information may be accepted by the Trustee;
(xi) pay out of its own funds, without any right of
reimbursement from the assets of the Trust Fund, any and all tax related
expenses of the Trust Fund (including, but not limited to, tax return
preparation and filing expenses and any professional fees or expenses related to
audits or any administrative or judicial proceedings with respect to the Trust
Fund that involve the Internal Revenue Service or state tax authorities), other
than the expense of obtaining any Opinion of Counsel required pursuant to
Sections 3.3, 5.10 and 8.2 and other than taxes except as specified herein;
(xii) upon filing with the Internal Revenue Service, the
Trustee shall furnish to the Holders of the Class R Certificates the Form 1066
and each Form 1066Q and shall respond promptly to written requests made not more
frequently than quarterly by any Holder of Class R Certificates with respect to
the following matters:
(1) the original projected principal and interest
cash flows on the Closing Date on the regular and residual interests created
hereunder and on the Mortgage Loans, based on the Prepayment Assumption;
(2) the projected remaining principal and interest
cash flows as of the end of any calendar quarter with respect to the regular and
residual interests created hereunder and the Mortgage Loans, based on the
Prepayment Assumption;
(3) the Prepayment Assumption and any interest rate
assumptions used in determining the projected principal and interest cash flows
described above;
(4) the original issue discount (or, in the case of
the Mortgage Loans, market discount) or premium accrued or amortized through the
end of such calendar quarter with respect to the regular or residual interests
created hereunder and with respect to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(5) the treatment of losses realized with respect to
the Mortgage Loans or the regular interests created hereunder, including the
timing and amount of any cancellation of indebtedness income of the REMIC 1995-2
with respect to such regular interests or bad debt deductions claimed with
respect to the Mortgage Loans;
(6) the amount and timing of any non-interest
expenses of the REMIC 1995-2; and
(7) any taxes (including penalties and interest)
imposed on the REMIC 1995-2, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure property" or
state or local income or franchise taxes; and
(xiii) make any other required reports in respect of interest
payments in respect of the Mortgage Loans and acquisitions and abandonments or
Mortgaged Property to the Internal Revenue Service and/or the borrowers, as
applicable.
(e) In the event that any tax is imposed on "prohibited
transactions" of the REMIC as defined in Section 860F(a)(2) of the Code, on the
"net income from foreclosure property" of the REMIC as defined in Section
860G(c) of the Code, on any contribution to the REMIC after the Startup Day
pursuant to Section 860G(d) of the Code, or any other tax is imposed, such tax
shall be paid by (i) the Trustee, if such tax arises out of or results from a
breach by the Trustee of any of its obligations under this Agreement, (ii) the
Servicer, if such tax arises out of or results from a breach by the Servicer of
any of its obligations under this Agreement, or otherwise (iii) the holders of
the Class R Certificates in proportion to their undivided beneficial ownership
interest in the related REMIC as are represented by such Class R Certificates.
To the extent such tax is chargeable against the holders of the Class R
Certificates, notwithstanding anything to the contrary contained herein, the
Trustee is hereby authorized to retain from amounts otherwise distributable to
the Holders of the Class R Certificates on any Remittance Date sufficient funds
to reimburse the Trustee for the payment of such tax (to the extent that the
Trustee has not been previously reimbursed or indemnified therefor).
Section 9.2 Certain Matters Affecting the Trustee. (a) 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 resolution, Officers' Certificate, Opinion of
Counsel, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(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 trusts or powers vested in it by this Agreement or to institute, conduct
or defend by litigation hereunder or in relation hereto at the request, order or
direction of the Certificate Insurer or any of the Certificateholders, pursuant
to the provisions of this Agreement, unless such Certificateholders or the
Certificate Insurer, as applicable, 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 obligation, upon the occurrence of an Event of Default (which
has not been cured), to exercise such of the rights and powers vested in it by
this Agreement, and to use the same degree of care and skill in its exercise as
a prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs;
(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 hereunder
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 the Certificate Insurer or Holders of
Class A Certificates evidencing 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 expense or
liability as a condition to taking any such action. The reasonable expense of
every such examination shall be paid by the Servicer or, if paid by the Trustee,
shall be repaid by the Servicer upon demand from the Servicer's own funds;
(vi) the right of the Trustee to perform any discretionary
act enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act;
(vii) the Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust created hereby or the powers
granted hereunder; and
(viii) 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.
(b) Following the Startup Day, the Trustee shall not
knowingly accept any contribution of assets to the Trust Fund, unless the
Trustee shall have received an Opinion of Counsel (at the expense of the
Servicer) to the effect that the inclusion of such assets in the Trust Fund will
not cause the REMIC 1995-2 to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject the REMIC 1995-2 to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law
or ordinances. The Trustee agrees to indemnify the Trust Fund and the Servicer
for any taxes and costs, including any attorney's fees, imposed or incurred by
the Trust Fund or the Servicer as a result of the breach of the Trustee's
covenants set forth within this subsection (b).
Section 9.3 Trustee Not Liable for Certificates or Mortgage
Loans. The recitals contained herein (other than the certificate of
authentication on the Certificates) shall be taken as the statements of the
Seller or the Servicer as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Agreement or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application of any funds paid to the Servicer in respect of the Mortgage Loans
or deposited in or withdrawn from the Collection Account by the Servicer. The
Trustee shall not be responsible for the legality or validity of the Agreement
or the validity, priority, perfection or sufficiency of the security for the
Certificates issued or intended to be issued hereunder.
Section 9.4 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgor of Certificates
with the same rights it would have if it were not Trustee, and may otherwise
deal with the parties hereto.
Section 9.5 Trustee's Fees and Expenses; Indemnity. (a) The
Trustee acknowledges that in consideration of the performance of its duties
hereunder it is entitled to receive the Trustee's Fee in accordance with the
provision of Section 6.5(a). Additionally, the Trustee hereby covenants, for
the benefit of the Depositor, that the Trustee has arranged separately with the
Servicer for the payment to the Trustee of all of the Trustee's expenses in
connection with this Agreement, including, without limitation, all of the
Trustee's fees and expenses in connection with any actions taken by the Trustee
pursuant to Section 9.12 hereof. For the avoidance of doubt, the parties hereto
acknowledge that it is the intent of the parties that the Depositor shall not
pay any of the Trustee's fees and expenses in connection with this transaction.
The Trustee shall not be entitled to compensation for any expense, disbursement
or advance as may arise from its negligence or bad faith, and the Trustee shall
have no lien on the Trust Fund for the payment of its fees and expenses.
(b) The Trust Fund, the Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified by the Servicer and held
harmless against any loss, liability, claim, damage or expense arising out of,
or imposed upon the Trust or the Trustee through the Servicer's acts or
omissions in violation of this Agreement, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence of
the Trustee in the performance of its duties hereunder or by reason of the
Trustee's reckless disregard of obligations and duties hereunder. The
obligations of the Servicer under this Section 9.5 arising prior to any
resignation or termination of the Servicer hereunder shall survive termination
of the Servicer and payment of the Certificates, and shall extend to any co-
trustee appointed pursuant to this Article IX.
Section 9.6 Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be (a) a banking association organized and doing
business under the laws of any state or the United States of America subject to
supervision or examination by federal or state authority, (b) authorized under
such laws to exercise corporate trust powers, including taking title to the
Trust Fund assets on behalf of the Certificateholders (c) having a combined
capital and surplus of at least $50,000,000, (d) whose long-term deposits, if
any, shall be rated at least BBB by S&P and Baa3 by Moody's (except as provided
herein) or such lower long-term deposit rating as may be approved in writing by
the Certificate Insurer, and (e) reasonably acceptable to the Certificate
Insurer as evidenced in writing. If such banking association 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 shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 9.7.
Section 9.7 Resignation and Removal of the Trustee. (a) The
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Servicer, the Certificate Insurer and to
all Certificateholders. Upon receiving such notice of resignation, the Servicer
shall promptly appoint a successor trustee by written instrument, in duplicate,
which instrument shall be delivered to the resigning Trustee and to the
successor trustee. A copy of such instrument shall be delivered to the
Depositor, the Certificateholders, the Certificate Insurer and the Seller by the
Servicer. Unless a 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.
(b) 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 the Servicer or the Certificate Insurer, or if at
any time the Trustee shall become incapable of acting, or shall be adjudged
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 the Servicer or the Certificate Insurer may remove the Trustee
and the Servicer shall, within 30 days after such removal, appoint, subject to
the approval of the Certificate Insurer, which approval shall not be
unreasonably delayed, a successor trustee by written instrument, in duplicate,
which instrument shall be delivered to the Trustee so removed and to the
successor trustee. A copy of such instrument shall be delivered to the
Depositor, the Certificateholders, the Certificate Insurer and the Seller by the
Servicer.
(c) If the Trustee fails to perform in accordance with the
terms of this Agreement, the Majority Certificateholders or the Certificate
Insurer may remove the Trustee and appoint a successor trustee by written
instrument or instruments, in triplicate, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered to the Servicer, one complete set to the Trustee so removed and one
complete set to the successor Trustee so appointed.
(d) Any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to any of the provisions of this
Section shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 9.8.
(e) Upon any termination of, or appointment of any successor
to the Trustee hereunder, the Trustee shall promptly transfer all of the
Residual Interest (as defined under the Code) of the Trust to the successor
Trustee.
Section 9.8 Successor Trustee. Any successor trustee appointed
as provided in Section 9.7 shall execute, acknowledge and deliver to the
Depositor, the Certificate Insurer, the Seller, the Servicer and to its
predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The predecessor trustee shall deliver to the successor
trustee all Mortgage Files and related documents and statements held by it
hereunder, and the Servicer and the predecessor trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for more fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties and obligations. No successor trustee shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor trustee shall be eligible under the provisions of Section 9.6.
Upon acceptance of appointment by a successor trustee as provided in this
Section, 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 Moody's and S&P. 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 Person
into which the Trustee may be merged or converted or with which it may be
consolidated or any corporation or national banking association resulting from
any merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation or national banking association succeeding to the business of
the trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association 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.
(a) Notwithstanding any other provisions hereof, 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 the same 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, 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 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 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 9.8 hereof.
(b) In the case of any appointment of a co-trustee or
separate trustee pursuant to this Section 9.10, 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, 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 by such separate trustee or co-trustee at the direction of the
Trustee.
(c) 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 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.
(d) 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. The Trustee shall not
be responsible for any action or inaction of any such separate trustee or co-
trustee, provided that the Trustee appointed such separate trustee or co-trustee
with due care. 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.
Section 9.11 Tax Returns; OID Interest Reporting. (a) The
Servicer and the Depositor, as applicable, upon request, will promptly furnish
the Trustee with all such information as may be reasonably required in
connection with the Trustee's preparation of all Tax Returns of the Trust Fund
or for the purpose of the Trustee responding to reasonable requests for
information made by Certificateholders in connection with tax matters and, upon
request within seven (7) Business Days after its receipt thereof, the Servicer
shall (a) sign on behalf of the Trust Fund any Tax Return that the Servicer is
required to sign pursuant to applicable federal, state or local tax laws, and
(b) cause such Tax Return to have been returned to the Trustee for filing and
for distribution to Certificateholders if required.
(b) Amounts paid to Certificateholders as interest shall not be
treated by the Trustee as constituting "qualified stated interest" as defined by
Treasury regulation Section 1.1273-1(c) and Tax Returns prepared by the Trustee
shall report such amounts in accordance with Treasury regulations addressing the
treatment of original issue discount obligations.
Section 9.12 Retirement of Certificates. The Trustee shall,
upon the retirement of the Certificates pursuant hereto or otherwise, furnish to
the Certificate Insurer a notice of such retirement, and, upon retirement of the
Certificates and the expiration of the term of the Certificate Insurance Policy,
shall surrender the Certificate Insurance Policy to the Certificate Insurer for
cancellation.
[Remainder of this page intentionally left blank]
ARTICLE X
Miscellaneous Provisions
Section 10.1 Limitation on Liability of the Depositor and the
Servicer. Neither the Depositor nor the Servicer nor any of the directors,
officers, employees or agents of the Depositor or the Servicer shall be under
any liability to the Trust, the Certificateholders or the Certificate Insurer
for any action taken, or for refraining from the taking of any action, in good
faith pursuant to this Agreement, or for errors in judgment; provided, however,
that this provision shall not protect the Depositor or the Servicer or any such
Person against any breach of warranties or representations made herein, or
against any specific liability imposed on each such party pursuant to this
Agreement or against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations or duties hereunder. The Depositor
or the Servicer and any director, officer, employee or agent of the Depositor or
the Servicer may rely in good faith on any document of any kind which, prima
facie, is properly executed and submitted by any appropriate Person respecting
any matters arising hereunder.
Section 10.2 Acts of Certificateholders; Certificateholders'
Rights. (a) Except as otherwise specifically provided herein, whenever
Certificateholder action, consent or approval is required under this Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Certificateholders if the Majority
Certificateholders or the Certificate Insurer agrees to take such action or give
such consent or approval.
(b) 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 heir to claim an accounting or to
take any action or 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.
(c) No Certificateholder shall have any right to vote
(except as expressly provided for herein) or in any manner otherwise control the
operation and management of the Trust 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 reason of any
action taken by the parties to this Agreement and any Supplement pursuant to any
provision hereof or thereof.
(d) The rights of the Certificateholders of Series 1995-2
will be determined pursuant to the Agreement. The rights of the Holders of any
Additional Certificates which may be issued by the Trustee pursuant to Section
6.11 of this Agreement shall be determined by a Supplement with respect thereto.
As to any such Series of Additional Certificates, the rights of such
Certificateholders as set forth in such Supplement shall supersede any rights of
such Certificateholders expressed herein. Section 6.11 hereof describes (i) the
provisions of any such Series which must be stated therein to describe the terms
of such Series and (ii) the provisions of this Agreement which shall be
applicable to any such new Series unless stated otherwise in such Supplement.
Such Supplement may provide for any other agreements between the parties hereto
as long as such agreements do not violate, as to any Certificates or any
Additional Certificates, Section 10.3.
Section 10.3 Amendment. (a) This Agreement may be amended
from time to time by the Servicer, the Depositor and the Trustee by written
agreement, upon the prior written consent of the Certificate Insurer (which
consent shall not be withheld if, in the Opinion of Counsel addressed to the
Trustee and the Certificate Insurer, failure to amend would adversely affect the
interests of the Certificateholders and such consent would not adversely affect
the interests of the Certificate Insurer), without notice to or consent of the
Certificateholders to cure any ambiguity, to correct or supplement any
provisions herein, to comply with any changes in the Code, or to make any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with the provisions of this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel, at
the expense of the party requesting the change, delivered to the Trustee and the
Certificate Insurer, adversely affect in any material respect the interests of
any Certificateholder; and provided further, that no such amendment shall reduce
in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, or change the rights or
obligations of any other party hereto without the consent of such party. The
Trustee shall give prompt written notice to Moody's and S&P of any amendment
made pursuant to this Section 10.3 or pursuant to Section 6.9 of the Purchase
and Sale Agreement.
(b) This Agreement may be amended from time to time by the
Servicer, the Depositor and the Trustee with the consent of the Certificate
Insurer (which consent shall not be withheld if, in the Opinion of Counsel
addressed to the Trustee and the Certificate Insurer, failure to amend would
adversely affect the interests of the Certificateholders and such consent would
not adversely affect the interests of the Certificate Insurer), the Majority
Certificateholders and the Holders of the majority of the undivided beneficial
ownership interest in the REMIC 1995-2 as is represented by the Class R
Certificates for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders; provided, however, that no such amendment
shall be made unless the Trustee and the Certificate Insurer receive an Opinion
of Counsel, at the expense of the party requesting the change, that such change
will not adversely affect the status of the REMIC 1995-2 as a REMIC or cause a
tax to be imposed on such REMIC, and provided further, that no such amendment
shall reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate or reduce the
percentage for the Holders of which are required to consent to any such
amendment without the consent of the Holders of 100% of Certificates affected
thereby.
(c) It shall not be necessary for the consent of Holders
under this Section to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof.
Section 10.4 Recordation of Agreement. To the extent permitted
by applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions
in which any or all of the properties subject to the Mortgages are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer at the Certificateholders' expense on direction
and at the expense of Majority Certificateholders requesting such recordation,
but only when accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders or is necessary for the administration or servicing of the
Mortgage Loans.
Section 10.5 Duration of Agreement. This Agreement shall
continue in existence and effect until terminated as herein provided.
Section 10.6 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (i) in the case of the Servicer, Irwin Home Equity Corporation,
2400 Camino Ramon, Suite 375, San Ramon, California 94583, Attention: Spencer
Carlsen, Vice President of Operations (with copies to the Seller), (ii) in the
case of the Seller, IHE Funding Corp., 500 Washington Street, Columbus, Indiana
47201, Attention: Greg Ehlinger, Vice President, with an additional copy of such
notice simultaneously delivered to the Servicer, (iii) in the case of the
Trustee, The Chase Manhattan Bank, N.A., Chase MetroTech Center, Brooklyn, New
York 11245 Attention: Regina Bishop, Second Vice President, Institutional Trust
Group, Prudential Securities Secured Financing Corporation Trust Series 1995-2,
(iv) in the case of the Certificateholders, as set forth in the Certificate
Register, (v) in the case of Moody's, 99 Church Street, New York, New York 10007
Attention: Jonathon Lieberman, (vi) in the case of S&P, 26 Broadway, New York,
New York 10004 Attention: Residential Mortgage Surveillance Group, (vii) in the
case of the Certificate Insurer, MBIA Insurance Corporation, 113 King Street,
Armonk, New York 10504, Attention: Surveillance Department, (viii) in the case
of the Fiscal Agent, to State Street Bank, 61 Broadway, 15th Floor, New York,
New York 10006, Attention: Municipal Registrar and Paying Agency (or such other
address as the Fiscal Agent shall specify to the Trustee in writing) and (ix) in
the case of the Depositor or the Underwriter, One New York Plaza, New York, New
York 10292, Attention: John Heeger, Managing Director. Any such notices shall be
deemed to be effective with respect to any party hereto upon the receipt of such
notice by such party, except that notices to the Certificateholders shall be
effective upon mailing or personal delivery.
Section 10.7 Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.
Section 10.8 No Partnership. Nothing herein contained shall be
deemed or construed to create a co-partnership or joint venture between the
parties hereto and the services of the Servicer shall be rendered as an
independent contractor and not as agent for the Certificateholders.
Section 10.9 Counterparts. This Agreement may be executed in
one or more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an
original; such counterparts, together, shall constitute one and the same
agreement.
Section 10.10 Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the Servicer, the Depositor, the
Trustee and the Certificateholders and their respective successors and permitted
assigns.
Section 10.11 Headings. The headings of the various sections
of this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
Section 10.12 The Certificate Insurer Default. Any right
conferred to the Certificate Insurer shall be suspended during any period in
which a Certificate Insurer Default exists. At such time as the Certificates
are no longer outstanding hereunder, and no amounts owed to the Certificate
Insurer hereunder remain unpaid, the Certificate Insurer's rights hereunder
shall terminate.
Section 10.13 Third Party Beneficiary. The parties agree that
each of the Seller and the Certificate Insurer is intended and shall have all
rights of a third-party beneficiary of this Agreement.
Section 10.14 Intent of the Parties. It is the intent of the
Depositor and Certificateholders that, for federal income taxes, state and local
income or franchise taxes and other taxes imposed on or measured by income, the
Certificates will be treated as evidencing beneficial ownership interests in a
REMIC. The parties to this Agreement and the holder of each Certificate, by
acceptance of its Certificate, and each beneficial owner thereof, agree to
treat, and to take no action inconsistent with the treatment of, the
Certificates in accordance with the preceding sentence for purposes of federal
income taxes, state and local income and franchise taxes and other taxes imposed
on or measured by income.
Section 10.15 Appointment of Tax Matters Person. The Holders
of the Class R Certificates hereby appoint the Trustee to act, as their agent,
as the Tax Matters Person for the REMIC 1995-2 for all purposes of the Code.
The Tax Matters Person will perform, or cause to be performed, such duties and
take, or cause to be taken, such actions as are required to be performed or
taken by the Tax Matters Person under the code. The Holders of the Class R
Certificates may hereafter appoint a different entity as their agent, or may
appoint one of the Class R Certificateholders to be the Tax Matters Person.
Section 10.16 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF NEW YORK.
(b) THE SERVICER AND THE TRUSTEE HEREBY SUBMIT TO THE NON-
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND
EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS
SET FORTH IN SECTION 10.6 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS,
POSTAGE PREPAID. THE DEPOSITOR, THE SERVICER AND THE TRUSTEE EACH HEREBY WAIVE
ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE DEPOSITOR, THE SERVICER OR THE TRUSTEE TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT ANY OF THEIR RIGHTS
TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(c) THE DEPOSITOR, THE SERVICER AND THE TRUSTEE EACH HEREBY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED
TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE WILL BE RESOLVED
IN A BENCH TRIAL WITHOUT A JURY.
[End of Agreement.]
IN WITNESS WHEREOF, the Servicer, the Trustee and the Depositor
have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION, as
Depositor
By: /s/ JOHN HEEGER
----------------------------------
Name: John Heeger
Title: Vice President
IRWIN HOME EQUITY CORPORATION
as Servicer
By: /s/ EDWIN K. CORBIN
----------------------------------
Name: Edwin K. Corbin
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.,
as Trustee
By: /s/ REGINA BISHOP
----------------------------------
Name: Regina Bishop
Title: Second Vice President
State of New York )
) ss.:
County of New York )
On the 6th day of December, 1995 before me, a Notary Public in
and for the State of New York, personally appeared, Edwin Corbin known to me to
be a Vice President of Irwin Home Equity Corporation, the corporation that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ ANN JANOWSKY
--------------------------
Notary Public
My Commission expires July 18, 1996
[Notary Page]
State of New York )
) ss.:
County of New York )
On the 6th day of December, 1995 before me, a Notary Public in
and for the State of New York, personally appeared Regina Bishop known to me to
be a Second Vice President of The Chase Manhattan Bank, N.A., the corporation
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ MARGARET M. PRICE
-------------------------
Notary Public
My Commission expires April 22, 1997
State of New York )
) ss.:
County of New York )
On the 6th day of December, 1995 before me, a Notary Public in
and for the State of New York, personally appeared John Heeger, known to me to
be a Vice President of Prudential Securities Secured Financing Corporation, the
corporation that executed the within instrument and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunder to set my hand and affixed
my official seal the day and year in this certificate first above written.
/s/ ANN JANOWSKY
-----------------------
Notary Public
My Commission expires July 18, 1996
PURCHASE AND SALE AGREEMENT
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Depositor
and
IHE FUNDING CORP.
Seller
Dated as of December 6, 1995
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Definitions ............................................. 2
ARTICLE II
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS
Section 2.1 Agreement to Purchase ................................. 5
Section 2.2 Purchase Price ........................................ 5
Section 2.3 Conveyance of Mortgage Loans; Possession of
Mortgage Files ........................................ 5
Section 2.4 Delivery of Mortgage Loan Documents ................... 6
Section 2.5 Acceptance of Mortgage Loans .......................... 8
Section 2.6 Transfer of Mortgage Loans; Assignment of
Agreement ............................................. 10
Section 2.7 Examination of Mortgage Files ......................... 10
Section 2.8 Books and Records ..................................... 11
Section 2.9 Cost of Delivery and Recordation of Documents ......... 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties as to the Seller........ 12
Section 3.2 Representations and Warranties Relating to the
Mortgage Loans ...................................... 14
Section 3.3 Representations and Warranties of the Depositor ....... 25
Section 3.4 Repurchase Obligation for Defective Docu-
mentation and for Breach of a Representation
or Warranty ........................................... 26
ARTICLE IV
THE SELLER
Section 4.1 Covenants of the Seller ............................... 30
Section 4.2 Merger or Consolidation ............................... 30
Section 4.3 Costs ................................................. 30
Section 4.4 Indemnification ....................................... 31
i
Page
ARTICLE V
CONDITIONS OF CLOSING
Section 5.1 Conditions of Depositor's Obligations ................ 34
Section 5.2 Conditions of Seller's Obligations .................. 36
Section 5.3 Termination of Depositor's Obligations ............... 36
ARTICLE VI
MISCELLANEOUS
Section 6.1 Notices .............................................. 37
Section 6.2 Severability of Provisions ........................... 37
Section 6.3 Agreement of Seller .................................. 37
Section 6.4 Survival ............................................. 37
Section 6.5 Effect of Headings and Table of Contents ............. 38
Section 6.6 Successors and Assigns ............................... 38
Section 6.7 Confirmation of Intent; Grant of Security Interest ... 38
Section 6.8 Miscellaneous ........................................ 39
Section 6.9 Amendments ........................................... 39
Section 6.10 Third-Party Beneficiaries ............................ 39
Section 6.11 GOVERNING LAW; CONSENT TO JURISDIC-
TION; WMVER OF JURY TRIAL ............................ 40
Section 6.12 Execution in Counterparts ............................ 41
Exhibits
Exhibit A - Mortgage Loan Schedule
Exhibit B - Officer's Certificate
Exhibit C - Opinion of Counsel to Seller
ii
This Purchase and Sale Agreement, dated as of December 6, 1995, by and
between Prudential Securities Secured Financing Corporation, a Delaware
corporation, its successors and assigns (the "Depositor"), and IHE Funding
Corp., a Delaware corporation and its successors (the "Seller").
W I T N E S S E T H:
WHEREAS, Exhibit A attached hereto and made a part hereof lists
certain home equity loans secured by mortgages on one- to four-family
residential properties owned by the Seller that the Seller desires to sell to
the Depositor and that the Depositor desires to purchase;
WHEREAS, it is the intention of the Seller and the Depositor
that simultaneously with the Seller's conveyance of the Mortgage Loans (as
defined herein) to Depositor on the Closing Date, (a) the Depositor shall
deposit the Mortgage Loans in a trust (the "Trust") pursuant to a Pooling and
Servicing Agreement to be dated as of December 6, 1995 (the "Pooling and
Servicing Agreement"), to be entered into by and among the Depositor, as
depositor, Irwin Home Equity Corporation, as servicer (in such capacity, the
"Servicer") and The Chase Manhattan Bank, N.A., as trustee (the "Trustee") and
(b) the Trustee shall issue certificates evidencing beneficial ownership
interests in the property of the trust fund formed by the Pooling and Servicing
Agreement to the Depositor and, at the request and pursuant to the directions of
the Seller, and in recognition of Irwin Union Bank and Trust Company's
continuing obligation to fund the Additional Balances (as defined herein) on the
Mortgage Loans deposited in the Trust, shall issue the Exchangeable Certificate
(as defined herein), representing the beneficial interest in such Additional
Balances on such Mortgage Loans, to Irwin Union Bank and Trust Company ("IUB");
WHEREAS, as a matter of convenience and in light of the ultimate
transfer of the Mortgage Notes and the Mortgage Loans securing the obligations
of each Mortgagor under the related Mortgage Notes into the Trust, the Seller
has caused the Mortgage Notes to be endorsed in a manner suitable for the
delivery to the Trustee and has caused the assignment of the Mortgage Loans to
be made directly to the Trustee, without providing or indicating on any
endorsement of the Mortgage Notes or assignment of the Mortgage Loans the
respective interim endorsees or interim assignees, it being understood that the
Trustee shall hold the Mortgage Notes as bailee for the Depositor until the
Purchaser transfers the Mortgage Notes to the Trustee pursuant to the Pooling
and Servicing Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used herein, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Capitalized terms used herein and not
otherwise defined shall have the respective meanings ascribed thereto in the
Pooling and Servicing Agreement.
"Additional Balance" shall mean any amounts added to the
principal balance of a Mortgage Loan after the Cut-Off Date as a result of the
Mortgagor on the related Mortgage Note exercising the right to borrow additional
amounts under such Mortgage Loan.
"Agreement" means this Purchase and Sale Agreement, as amended
or supplemented in accordance with the provisions hereof.
"Closing Date" shall have the meaning ascribed thereto in
Section 2.1(c) hereof.
"Cut-Off Date Aggregate Principal Balance" means the aggregate
unpaid Principal Balance of the Mortgage Loans as of the Cut-Off Date. The Cut-
Off Date Aggregate Principal Balance is $51,583,721.78.
"Cut-Off Date Principal Balance" means as to each Mortgage Loan,
its unpaid Principal Balance as of the Cut-Off Date.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Index" means, as to any Mortgage Loan, a rate per annum equal
to the highest prime rate published in the "Money Rates" section of The Wall
Street Journal on the last Business Day in the applicable period, or as
otherwise determined in accordance with the related Mortgage Note.
"Interest Adjustment Date" means the date on which the Mortgage
Interest Rate is or may be adjusted with respect to each Mortgage Loan.
"Mortgage Interest Rate" means, as to any Mortgage Loan, the per
annum rate at which interest accrues on the unpaid principal balance thereof, as
adjusted from time to time in accordance with the provisions of the related
Mortgage Note, which rate is (a) prior to the first Interest Adjustment Date for
each such Mortgage Loan occurring after the Cut-Off Date, the initial Mortgage
Interest Rate for such Mortgage Loan indicated on the Mortgage Loan Schedule and
(b) from and after such first Interest Adjustment Date, the sum of the Index
applicable to the most recent Interest Adjustment Date, and the Gross Margin,
rounded as set forth in such Mortgage Note, subject to the Lifetime Cap and the
Lifetime Floor and any applicable statutory maximum interest rate as set forth
in the related Mortgage Note, that may be applicable to such Mortgage Loan at
any time during the life of such Mortgage Loan.
"Mortgage Loans" means (i) the home equity revolving credit line
loans identified on the Mortgage Loan Schedule on the Closing Date, (ii) any
additional such home equity revolving credit line loans identified on the
Mortgage Loan Schedule after the Closing Date, as such schedule is amended and
supplemented from time to time in accordance with the terms of the Pooling and
Servicing Agreement, (iii) each Mortgage Note evidencing any credit line loan
referred to in (i) or (ii) above, including all amounts now or hereafter due
under such Mortgage Notes whether relating to such credit line loans or other
loans which may be made from time to time and (iv) the related Mortgages; in
each case other than payments of interest that accrued on each Mortgage Loan up
to and including the Due Date immediately preceding the applicable cut-off date.
"Mortgage Loan Schedule" shall have the meaning ascribed thereto
in the Pooling and Servicing Agreement. The Mortgage Loan Schedule is attached
hereto as Exhibit A.
"Mortgage Loan Sale Agreement" means the Mortgage Loan Sale
Agreement, dated the date hereof, between IUB, an Indiana banking corporation,
as seller thereunder, and the Seller, as purchaser thereunder.
"Payment Adjustment" means, with respect to any Mortgage Loan
(i) the adjustment of the amount of the Monthly Payment due on the Mortgage Loan
which adjustment may result from the capitalizing of accrued and unpaid interest
on such Mortgage Loan in accordance with the amortization schedule at the time
applicable thereto and (ii) the adjustment of the Monthly Payment due on the
Mortgage Loan which adjustment may result from the conversion, after the first
ten years of the life of the Mortgage Loan, from a Monthly Payment representing
interest only, to a Monthly Payment such that the principal outstanding balance
of the Mortgage Loan will be fully amortized over the remaining life of such
Mortgage Loan.
"Payment Adjustment Date" means, with respect to a Mortgage Loan
the date on which a Payment Adjustment may occur.
"Pooling and Servicing Agreement" shall have the meaning
ascribed thereto in the recitals hereof.
"Prospectus" means the Prospectus dated August 4, 1995 relating
to the offering by the Depositor from time to time of its Pass-Through
Certificates (Issuable in Series) in the form in which it was or will be filed
with the Securities and Exchange Commission pursuant to Rule 424(b) under the
Securities Act with respect to the offer and sale of the Certificates.
"Registration Statement" means that certain registration
statement on Form S-3, as amended (Registration No. 33-91148) relating to the
offering by the Depositor from time to time of its Pass-Through Certificates
(Issuable in Series) as heretofore declared effective by the Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means IHE Funding Corp., in its capacity as Seller of
the Mortgage Loans under this Agreement, and any successor to IHE Funding Corp.,
whether through merger, consolidation, purchase and assumption of IHE Funding
Corp. or all or substantially all of its assets or otherwise.
"Servicer" means Irwin Home Equity Corporation, in its capacity
as servicer of the Mortgage Loans and as the Servicer under the Pooling and
Servicing Agreement or any successor appointed pursuant to the Pooling and
Servicing Agreement.
"Termination Event" means the existence of any one or more of
the following conditions:
(a) a stop order suspending the effectiveness of the Registration
Statement shall have been issued or a proceeding for that purpose shall have
been initiated or threatened by the Commission; or
(b) subsequent to the execution and delivery of this Agreement, a
downgrading, or public notification of a possible change, without indication of
direction, shall have occurred in the rating afforded any of the debt securities
or claims paying ability of any person providing any form of credit enhancement
for any of the Certificates, by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Securities Act; or
(c) subsequent to the execution and delivery of this Agreement,
there shall have occurred an adverse change in the condition, financial or
otherwise, earnings, affairs, regulatory situation or business prospects of the
Certificate Insurer or the Seller reasonably determined by the Depositor to be
material; or
(d) subsequent to the date of this Agreement there shall have
occurred any of the following: (i) a suspension or material limitation in
trading in securities substantially similar to the Certificates; (ii) a general
moratorium on commercial banking activities in New York declared by either
Federal or New York State authorities; or (iii) the engagement by the United
States in hostilities, or the escalation of such hostilities, or any calamity or
crisis, if the effect of any such event specified in this clause (iii) in the
reasonable judgment of the Depositor makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Certificates on the
terms and in the manner contemplated in the Prospectus Supplement.
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ARTICLE II
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS
Section 2.1 Agreement to Purchase. (a) Subject to the
terms and conditions of this Agreement, the Seller hereby sells, conveys,
transfers and assigns and the Depositor hereby purchases, the Mortgage Loans,
it being understood by the parties hereto that the Depositor is transferring all
rights with respect to each Mortgage Loan but the obligation to fund any
Additional Balances on the Mortgage Loans is not transferred hereby, and that
such obligation has been reserved and retained by IUB pursuant to the Mortgage
Loan Sale Agreement.
(b) Subject to Section 2.7, the Depositor and the Seller
have agreed upon which of the Seller's Mortgage Loans are purchased by the
Depositor pursuant to this Agreement, and the Seller has caused IUB to prepare
the Mortgage Loan Schedule. The Mortgage Loan Schedule is attached hereto as
Exhibit A. The Mortgage Loan Schedule shall be amended from time to time to
reflect the addition, or removal of any Additional Balances on the Mortgage
Loans, or in connection with the issuance of any Series of certificates.
(c) The closing for the purchase and sale of the Mortgage
Loans shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom,
New York, New York, at 10:00 a.m., New York time, on December 6, 1995 or such
other place and time as the parties shall agree (such time being herein referred
to as the "Closing Date").
Section 2.2 Purchase Price. On the Closing Date, as full
consideration for the Seller's sale of the Mortgage Loans and associated rights
to the Depositor, the Depositor will deliver to the Seller: (a) an amount in
cash equal to the sum of 100% of the aggregate principal balance as of the
Closing Date of the Class A Certificates and (b) the Class R Certificate to be
issued pursuant to the Pooling and Servicing Agreement. In recognition of the
IUB's continuing obligation to fund the Additional Balances drawn by the
Mortgagor under the related Mortgage Loan, and pursuant to the Seller's request,
the Depositor shall, pursuant to the Pooling and Servicing Agreement, cause the
Trustee to issue the Exchangeable Certificate, representing the right to receive
payments allocable to the Additional Balances, to IUB.
Section 2.3 Conveyance of Mortgage Loans; Possession of
Mortgage Files. (a) Effective as of the Closing Date, the Seller hereby sells,
transfers, assigns, sets over and conveys to the Depositor, without recourse but
subject to the terms of this Agreement, all right, title and interest in and to
the Mortgage Loans, the insurance policies relating to each such Mortgage Loan,
if any, and all right, title and interest in and to the proceeds of such
insurance policies from and after the Closing Date together with all of its
rights under the Mortgage Loan Sale Agreement.
(b) Upon the sale of such Mortgage Loans, the ownership of
each related Mortgage Note, each related Mortgage and the contents of the
related Mortgage File shall immediately vest in the Depositor and the ownership
of all related records and documents with respect to each Mortgage Loan prepared
by or which come into the possession of the Seller shall immediately vest in the
Depositor. The contents of any Mortgage File in the possession of the Seller at
any time after such sale, and any scheduled payments of principal and interest
on the Mortgage Loans due after the Cut-Off Date and received by the Seller
(excluding any interest on or prior to the Due Date immediately preceding the
Cut-Off Date), shall be held in trust by the Seller for the benefit of the
Depositor as the owner thereof, and shall be promptly delivered by the Seller to
or upon the order of the Depositor.
(c) Pursuant to the Pooling and Servicing Agreement, the
Depositor shall, on the Closing Date, irrevocably transfer, assign, set over and
otherwise convey all of its right, title and interest in and to the applicable
Mortgage Loans, all of its rights (exclusive of any of its obligations) under
this Agreement, and any rights arising under the Mortgage Loan Sale Agreement
assigned to it to the Trustee for the benefit of the Certificateholders, the
holder of the Exchangeable Certificate and of any Additional Certificate and the
Certificate Insurer.
Section 2.4 Delivery of Mortgage Loan Documents. (a) On or
prior to the Closing Date, the Seller shall deliver to the Trustee (as assignee
of the Depositor pursuant to the Pooling and Servicing Agreement), each of the
following documents for each applicable Mortgage Loan:
(i) The original Mortgage Note, endorsed by the
holder of record without recourse in the following form: "Pay to the order of
, without recourse" and signed in the name of the holder of record, and if by
the Seller, by an authorized officer;
(ii) The original Mortgage with evidence of recording
indicated thereon; provided, that if such Mortgage has not been returned from
the applicable recording office, then such recorded Mortgage shall be delivered
when so returned;
(iii) An assignment of the original Mortgage, in
suitable form for recordation in the jurisdiction in which the related Mortgaged
Property is located, in the name of the holder of record of the Mortgage Loan by
an authorized officer (with evidence of submission for recordation of such
assignment in the appropriate real estate recording office for such Mortgaged
Property to be received by the Trustee within 14 days of the Closing Date);
provided, however, that assignments of mortgages shall not be required to be
submitted for recording with respect to any Mortgage Loan if there shall have
been delivered no later than 14 days after the Closing Date an opinion of
counsel in form and substance satisfactory to the Purchaser, the Depositor, the
Trustee, each of the Rating Agencies and the Certificate Insurer stating that,
in such counsel's opinion, the failure to record such assignment shall not have
a materially adverse effect on the security interest of the Depositor or the
Trustee in the Mortgage; provided, further, that any assignment not submitted
for recordation within 14 days of the Closing Date shall be recorded upon the
earlier to occur of (i) receipt by the Trustee of the Certificate Insurer's
written direction to record such Mortgage, (ii) the occurrence of any Event of
Default, as such term is defined in the Pooling and Servicing Agreement, or
(iii) a bankruptcy or insolvency proceeding involving the Mortgagor is initiated
or foreclosure proceedings are initiated against the Mortgaged Property as a
consequence of an event of default under the Mortgage Loan provided, further,
that if the related Mortgage has not been returned from the applicable recording
office, then such assignment shall be delivered when so returned (and a blanket
assignment with respect to such unrecorded Mortgage Loan shall be delivered on
the Closing Date);
(iv) Any intervening assignments of the Mortgage with
evidence of recording thereon;
(v) Any assumption, modification, consolidation or
extension agreements; and
(vi) The policy of title insurance (or a commitment
for title insurance, if the policy is being held by the title insurance company
pending recordation of the Mortgage) and the certificate of primary mortgage
guaranty insurance, if any, issued with respect to such Mortgage Loan, provided,
however, that Mortgage Loans with a principal balance under $15,000 as of the
Cut-Off Date which are in a second lien position and have been submitted for
review of title after July 10, 1995 shall be exempt from this requirement.
(b) In the event that any such Assignment of Mortgage
referred to in clause (a)(iii) above is not in a suitable form for recording or
is lost or, upon an attempt to record such Assignment of Mortgage, is returned
unrecorded because of a defect therein, the Seller shall promptly prepare a
substitute Assignment of Mortgage or cure such defect, as the case may be.
(c) The Seller shall, within five Business Days after the
receipt thereof, and in any event, no later than 120 days after the Closing
Date, deliver or cause to be delivered to the Trustee or its designee (as
assignee of the Depositor pursuant to the Pooling and Servicing Agreement): (i)
the original recorded Mortgage and related power of attorney, if any, in those
instances where a copy thereof certified by the Seller was delivered to the
Trustee (as assignee of the Depositor pursuant to the Pooling and Servicing
Agreement); (ii) the original recorded Assignment of Mortgage from the Seller to
the Trustee (as assignee of the Depositor pursuant to the Pooling and Servicing
Agreement) delivered pursuant to the foregoing clause (a)(iii) above, which,
together with any intervening assignments of Mortgage, evidences a complete
chain of assignment from the originator of the Mortgage Loan to the Trustee in
those instances where copies of such Assignments certified by the Seller were
delivered to the Trustee (as assignee of the Depositor pursuant to the Pooling
and Servicing Agreement); and (iii) the title insurance policy or title opinion
required in clause (a)(vi) above. Notwithstanding anything to the contrary
contained in this Section 2.4, in those instances where the public recording
office retains the original Mortgage, power of attorney, if any, assignment or
Assignment of Mortgage after it has been recorded or such original has been
lost, the Seller shall be deemed to have satisfied its obligations hereunder
upon delivery to the Trustee (as assignee of the Depositor pursuant to the
Pooling and Servicing Agreement) of a copy of such Mortgage, power of attorney,
if any, assignment or Assignment of Mortgage certified by the public recording
office to be a true copy of the recorded original thereof. From time to time
the Seller may forward or cause to be forwarded to the Trustee (as assignee of
the Depositor pursuant to the Pooling and Servicing Agreement) additional
original documents evidencing an assumption or modification of a Mortgage Loan.
(d) All original documents relating to the Mortgage Loans
that are not delivered to the Trustee (as assignee of the Depositor pursuant to
the Pooling and Servicing Agreement) as permitted by this Section 2.4 are and
shall be held by the Seller in trust for the benefit of the Trustee on behalf of
the Certificateholders and the Certificate Insurer. In the event that any such
original document is required pursuant to the terms of this Section 2.4 to be a
part of a Mortgage File, such document shall be delivered promptly to the
Trustee (as assignee of the Depositor pursuant to the Pooling and Servicing
Agreement). From and after the sale of the Mortgage Loans to the Depositor
pursuant hereto, to the extent that the Seller retains legal title of record to
any Mortgage Loans prior to the vesting of legal title in the Trustee (as
assignee of the Depositor pursuant to the Pooling and Servicing Agreement), such
title shall be retained in trust for the Depositor as the owner of the Mortgage
Loans and the Trustee, as the Depositor's assignee.
Section 2.5 Acceptance of Mortgage Loans. (a) Pursuant to
the Pooling and Servicing Agreement, the Trustee has agreed to execute and
deliver on or prior to the Closing Date an acknowledgment of receipt of, for
each Mortgage Loan, the original Mortgage Note with respect to each Mortgage
Loan (with any exceptions noted), in the form attached as Exhibit E to the
Pooling and Servicing Agreement and declares that it will hold such documents
and any amendments, replacements or supplements thereto, as well as any other
assets included in the definition of Trust Fund in the Pooling and Servicing
Agreement and delivered to the Trustee, as Trustee in trust upon and subject to
the conditions set forth in the Pooling and Servicing Agreement for the benefit
of the Certificateholders and the Certificate Insurer. Pursuant to the Pooling
and Servicing Agreement, the Trustee has agreed, for the benefit of the
Certificateholders and the Certificate Insurer, to review (or cause to be
reviewed) each Trustee's Mortgage File within 45 Business Days after the Closing
Date (or, with respect to any Qualified Substitute Mortgage Loan, within 45
Business Days after the receipt by the Trustee thereof) and to deliver to the
initial Certificateholders, the Seller, the Servicer and the Certificate Insurer
a certification in the form attached to the Pooling and Servicing Agreement as
Exhibit F to the effect that, as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), (i) all documents required to be delivered to it pursuant to the
Pooling and Servicing Agreement are in its possession, and (ii) each such
document has been reviewed by it, has been, to the extent required, executed,
and has not been mutilated, damaged, torn or otherwise physically altered
(handwritten additions, changes or corrections shall not constitute physical
alteration if initialled by the Mortgagor), appears regular on its face and
relates to such Mortgage Loan. Pursuant to the Pooling and Servicing Agreement,
the Trustee shall be under no duty or obligation to inspect, review or examine
any such documents, instruments, certificates or other papers to determine that
they are genuine, enforceable, or appropriate for the represented purpose or
that they are other than what they purport to be on their face. Pursuant to the
Pooling and Servicing Agreement, by December 6, 1996 the Trustee shall be
required to deliver (or cause to be delivered) to the Servicer, the Seller, the
initial Certificateholders and the Certificate Insurer a final certification in
the form attached to the Pooling and Servicing Agreement as Exhibit G to the
effect that, as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in such certification as not covered by such certification), and as
to any document noted in an exception included in the Trustee's initial
certification, (i) all documents required to be delivered to it hereunder and
pursuant to the Pooling and Servicing Agreement are in its possession, and (ii)
each such document has been reviewed by it, has been, to the extent required,
executed, and has not been mutilated, damaged, torn or otherwise physically
altered (handwritten additions, changes or corrections shall not constitute
physical alteration if initialled by the Mortgagor), appears regular on its face
and relates to such Mortgage Loan.
(b) The Pooling and Servicing Agreement provides that, if
the Certificate Insurer or the Trustee during the process of reviewing the
Trustee's Mortgage Files finds any document constituting a part of a Trustee's
Mortgage File which is not executed, has not been received, is unrelated to the
Mortgage Loan identified in the Mortgage Loan Schedule, or does not conform to
the requirements of Section 2.4 or the description thereof as set forth in the
Mortgage Loan Schedule, the Trustee or the Certificate Insurer, as applicable,
shall promptly so notify the Servicer, the Seller, the Certificate Insurer and
the Trustee. The Seller agrees that in performing any such review, the Trustee
may conclusively rely on the Seller as to the purported genuineness of any such
document and any signature thereon. The Seller agrees to use reasonable efforts
to remedy a material defect in a document constituting part of a Mortgage File
of which it is notified. If, however, within 60 days after such notice the
Seller has not remedied the defect and the defect materially and adversely
affects the interest of the Certificateholders in the related Mortgage Loan or
the interests of the Certificate Insurer, then the Seller shall either
substitute in lieu of such Mortgage Loan a Qualified Substitute Mortgage Loan or
purchase such Mortgage Loan in the manner and subject to the conditions set
forth in Section 3.4 hereof, and Section 3.3 of the Pooling and Servicing
Agreement.
(c) The failure of the Trustee or the Certificate Insurer to
give any notice contemplated herein within the time periods specified above
shall not affect or relieve the Seller's obligation to repurchase for any
Mortgage Loan pursuant to this Section 2.5 or Section 3.4 of this Agreement or
the Pooling and Servicing Agreement.
(d) In the event that any Mortgage Note required to be
delivered pursuant to Section 2.4 is conclusively determined by any of the
Seller, the Servicer, the Custodian or the Trustee to be lost, stolen or
destroyed, the Seller shall, within 14 days of the Closing Date, deliver to the
Trustee a "lost note affidavit" in form and substance acceptable to the Trustee,
and shall simultaneously therewith cause the originator of the Mortgage Loan
related to such Mortgage Note to request the obligor on such Mortgage Note to
execute and return a replacement Mortgage Note, and shall further agree to hold
the Purchaser, the Depositor, the Trustee and the Certificate Insurer harmless
from any loss or damage resulting from any action taken in reliance on the
delivery and possession by the Trustee of such lost note affidavit. Upon the
receipt of such replacement Mortgage Note, the Trustee shall return the lost
note affidavit and the Servicer shall have no further indemnification obligation
with respect to such lost note affidavit. The delivery of any such lost note
affidavit shall not affect the obligations of the Seller pursuant to this
Section 2.5 or Section 3.4 of this Agreement.
Section 2.6 Transfer of Mortgage Loans; Assignment of
Agreement. The Seller hereby acknowledges and agrees that the Depositor may
sell, transfer and assign its interest under this Agreement in accordance with
the Pooling and Servicing Agreement to the Trustee as may be required to effect
the purposes of the Pooling and Servicing Agreement, without further notice to,
or consent of, the Seller, and the Trustee shall succeed to such of the rights
and obligations of the Depositor hereunder as shall be so assigned. The
Depositor shall, pursuant to the Pooling and Servicing Agreement, assign all of
its right, title and interest in and to the Mortgage Loans and its right to
exercise the remedies created by Sections 2.5 and 3.4 hereof for breaches of the
representations, warranties, agreements and covenants of the Seller contained in
Sections 2.4, 2.5, 3.1 and 3.2 hereof to the Trustee for the benefit of the
Certificateholders and the Certificate Insurer. The Seller agrees that, upon
such assignment to the Trustee, such representations, warranties, agreements and
covenants will run to and be for the benefit of the Trustee and the Trustee may
enforce, without joinder of the Depositor, the repurchase obligations of the
Seller set forth herein with respect to breaches of such representations,
warranties, agreements and covenants.
Section 2.7 Examination of Mortgage Files. Prior to the
Closing Date, the Seller shall make the Mortgage Files available to the
Depositor or its designee for examination at the Seller's offices or at such
other place as the Seller shall reasonably specify. Such examination may be
made by the Depositor or its designee at any time on or before the Closing Date.
If the Depositor or its designee makes such examination prior to the Closing
Date and identifies any Mortgage Loans that do not conform to the requirements
of the Depositor as described in this Agreement, such Mortgage Loans shall be
deleted from the Mortgage Loan Schedule and may be replaced, prior to the
Closing Date, by substitute Mortgage Loans acceptable to the Depositor. The
Depositor may, at its option and without notice to the Seller, purchase all or
part of the Mortgage Loans without conducting any partial or complete
examination. The fact that the Depositor or the Trustee has conducted or has
failed to conduct any partial or complete examination of the Mortgage Files
shall not affect the rights of the Depositor or the Trustee to demand repurchase
or other relief as provided in this Agreement.
Section 2.8 Books and Records. The sale of each Mortgage
Loan shall be reflected on the Seller's accounting and other records, balance
sheet and other financial statements as a sale of assets by the Seller to the
Depositor. The Seller shall be responsible for maintaining, and shall cause to
be maintained, a complete set of books and records for each Mortgage Loan which
shall be clearly marked to reflect the ownership of each Mortgage Loan by the
Trustee for the benefit of the Certificateholders and the Certificate Insurer.
Section 2.9 Cost of Delivery and Recordation of Documents.
The costs relating to the delivery and recordation of the documents specified in
this Article II in connection with the Mortgage Loans shall be borne by the
Seller.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties as to the Seller.
The Seller hereby represents and warrants to the Depositor, as of the Closing
Date, that:
(a) The Seller is a Delaware corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all licenses necessary to carry on its business as now being conducted
and is licensed, qualified and in good standing in each state where a Mortgaged
Property is located and is duly licensed and qualified in each state that
requires licensing or qualification in order to conduct business of the type
conducted by the Seller and to perform its obligations as the Seller hereunder,
and in any event the Seller is in compliance with the laws of any such state to
the extent necessary to ensure the enforceability of the related Mortgage Loan;
the Seller has the full power and authority, corporate and otherwise, to execute
and deliver this Agreement and to perform in accordance herewith; the execution,
delivery and performance of this Agreement (including all instruments of
transfer to be delivered pursuant to this Agreement) by the Seller and the
consummation of the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and enforceable
obligation of the Seller; and all requisite corporate action has been taken by
the Seller to make this Agreement valid and binding upon the Seller in
accordance with its terms;
(b) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery and
performance by the Seller of or compliance by the Seller with this Agreement or
the sale of the Mortgage Loans pursuant to the terms of this Agreement or the
consummation of the transactions contemplated by this Agreement, or if required,
such approval has been obtained prior to the Closing Date;
(c) Neither the execution and delivery of this Agreement,
the acquisition or origination of the Mortgage Loans by the Seller or the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, has or will conflict with or result in a
breach of any of the terms, conditions or provisions of the Seller's charter or
by-laws or any legal restriction or any agreement or instrument to which the
Seller is now a party or by which it is bound or to which its property is
subject, or constitute a default or result in an acceleration under any of the
foregoing, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Seller or its property is subject, or impair the
ability of the Trustee (or the Servicer as the agent of the Trustee) to realize
on the Mortgage Loans, or impair the value of the Mortgage Loans;
(d) Neither this Agreement nor the information contained in
the Prospectus Supplement under the captions "Description of the Mortgage Loans"
or "IHE Funding Corp." nor any statement, report or other document prepared by
the Seller and furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any untrue
statement or alleged untrue statement of any 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 they were made, not misleading;
(e) There is no action, suit, proceeding or investigation
pending or, to the knowledge of the Seller, threatened before a court,
administrative agency or government tribunal against the Seller which, either in
any one instance or in the aggregate, may result in any material adverse change
in the business, operations, financial condition, properties or assets of the
Seller, or in any material impairment of the right or ability of the Seller to
carry on its business substantially as now conducted, or in any material
liability on the part of the Seller, or which would draw into question the
validity of this Agreement, the Mortgage Loans, or of any action taken or to be
taken in connection with the obligations of the Seller contemplated herein, or
which would materially impair the ability of the Seller to perform under the
terms of this Agreement or that might prohibit its entering into this Agreement
or the consummation of any of the transactions contemplated hereby;
(f) The Seller is not in violation of or in default with
respect to, and the execution and delivery of this Agreement by the Seller and
its performance of and compliance with the terms hereof will not constitute a
violation or default with respect to, any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or governmental
agency, which violation or default might have consequences that would materially
and adversely affect the condition (financial or other) or operations of the
Seller or its properties or might have consequences that would materially and
adversely affect its performance hereunder;
(g) Upon the receipt of each Trustee's Mortgage File by the
Depositor under this Agreement, the Depositor will have good title on behalf of
the Trust Fund to each related Mortgage Loan and such other items comprising the
corpus of the Trust Fund free and clear of any lien created by the Seller (other
than liens which will be simultaneously released);
(h) The consummation of the transactions contemplated by
this Agreement are in the ordinary course of business of the Seller, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
the Seller pursuant to this Agreement are not subject to the bulk transfer or
any similar statutory provisions in effect in any applicable jurisdiction;
(i) With respect to any Mortgage Loan purchased by the
Seller, the Seller acquired title to the Mortgage Loan in good faith, without
notice of any adverse claim not otherwise disclosed to the Depositor;
(j) The Seller does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant contained in
this Agreement. The Seller is solvent and the sale of the Mortgage Loans by the
Seller pursuant to the terms of this Agreement will not cause the Seller to
become insolvent. The sale of the Mortgage Loans by the Seller pursuant to the
terms of this Agreement was not undertaken with the intent to hinder, delay or
defraud any of the Seller's creditors;
(k) The Mortgage Loans are not intentionally selected by the
Seller for sale to the Depositor in a manner so as to affect adversely the
interests of the Depositor or of any transferee of the Depositor (including the
Trustee);
(l) [RESERVED];
(m) The Seller has not dealt with any broker or agent or
anyone else that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans to the Depositor other than to the Depositor
or an affiliate thereof; and
(n) The consideration received by the Seller upon the sale
of the Mortgage Loans under this Agreement constitutes fair consideration and
reasonably equivalent value for the Mortgage Loans.
Section 3.2 Representations and Warranties Relating to the
Mortgage Loans. The Seller represents and warrants to the Depositor as of the
Closing Date that, as to each Mortgage Loan, immediately prior to the sale and
transfer of such Mortgage Loan by the Seller to the Depositor:
(a) The Mortgage Loans had, as of the Cut-Off Date, an
aggregate Principal Balance equal to $51,583,721.78, and all of the information
set forth in the Mortgage Loan Schedule is complete, true and correct;
(b) All payments required to be made up to the Cut-Off Date
for the Mortgage Loan under the terms of the Mortgage Note have been made and
credited. Unless otherwise specified on the Mortgage Loan Schedule, no payment
required under the Mortgage Loan is more than 30 days delinquent nor has any
payment under the Mortgage Loan been delinquent for more than 30 days more than
once in the 12 months preceding the Cut-Off Date; and the first Monthly Payment
has been made or shall be made, as the case may be, with respect to the Mortgage
Loan on the Due Date or within the grace period;
(c) To the best of Seller's knowledge, there are no defaults
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,
or an escrow of funds has been established in an amount sufficient to pay for
every such item which remains unpaid and which has been assessed but is not yet
due and payable. The Seller has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the Mortgagor,
directly or indirectly, for the payment of any amount required under the
Mortgage Loan;
(d) The terms of the Mortgage Note and Mortgage have not
been impaired, waived, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary to protect the interests of the
Trustee on behalf of the Certificateholders and which has been delivered to the
Trustee. The substance of any such waiver, alteration or modification has been
approved by the title insurer, to the extent required by the policy, and its
terms are reflected on the Mortgage Loan Schedule. No Mortgagor has been
released, in whole or in part, except in connection with an assumption agreement
approved by the title insurer, to the extent required by the policy, and which
assumption agreement is part of the Mortgage File delivered to the Trustee and
the terms of which are reflected in the Mortgage Loan Schedule;
(e) The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including, without limitation, 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, recoupment, counterclaim or defense,
including, without limitation, the defense of usury, and no such right of
rescission, set-off, recoupment, counterclaim or defense has been asserted with
respect thereto, and no Mortgagor was a debtor in any state or federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated;
(f) Pursuant to the terms of the Mortgage, the Mortgaged
Property is subject to fire and casualty insurance with a standard mortgagee
clause and extended coverage in an amount which is not less than the replacement
value of the improvements securing such Mortgage Loan. The fire and casualty
insurance is standard in the industry for property similar (in terms of the
property type, value and location) to the Mortgaged Property. If the Mortgaged
Property is in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards (and such flood
insurance has been made available), a flood insurance policy is in effect with
respect to the Mortgaged Property meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(i) the unpaid principal balance of the Mortgage Loan, (ii) the full insurable
value of the Mortgaged Property or (iii) the maximum amount of insurance
available under the Flood Disaster Protection Act of 1973. To the best of
Seller's knowledge, all such insurance policies (collectively, the "hazard
insurance policy") meet the requirements of the current guidelines of the
Federal Insurance Administration, conform to the requirements of the FNMA
Sellers' Guide and the FNMA Servicers' Guide, and are a standard policy of
insurance for the locale where the Mortgaged Property is located. It is
understood and agreed that such insurance is with insurers approved by the
Servicer and that no earthquake or other additional insurance is to be required
of any Mortgagor or to be maintained on property acquired in respect of a
defaulted loan, other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance.
The hazard insurance policy names (and will name) the Mortgagor as the insured
and contains a standard mortgagee loss payable clause in favor of the IUB, and
its successors and assigns. The Seller has caused and will cause to be
performed any and all acts required to be performed to preserve the rights and
remedies of the Trustee in any hazard insurance policies applicable to the
Mortgage Loans including, without limitation, any necessary notifications of
insurers and assignments of policies or interests therein. The Mortgage
obligates the Mortgagor thereunder to maintain the hazard insurance policy at
the Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such insurance at
such Mortgagor's cost and expense, and to seek reimbursement therefor from the
Mortgagor; provided, however, that the addition of any such cost shall not be
taken into account for purposes of calculating the principal amount of the
Mortgage Note or the Mortgage Loan secured by the Mortgage Note. Where required
by state law or regulation, the Mortgagor has been given an opportunity to
choose the carrier of the required hazard insurance, provided the policy is not
a "master" or "blanket" hazard insurance policy covering a condominium or the
common facilities of a planned unit development. To the best of Seller's
knowledge, the hazard insurance policy is the valid and binding obligation of
the insurer, is in full force and effect, and will be in full force and effect
and inure to the benefit of the Trustee upon the consummation of the
transactions contemplated by this Agreement. Neither IUB nor the Seller has
engaged in, has knowledge of the Mortgagor's or any subservicer's having engaged
in, any act or omission which would impair the coverage of any such policy, the
benefits of the endorsement provided for herein, or the validity and binding
effect of either. To the best of Seller's knowledge, in connection with the
issuance of the hazard insurance policy, no unlawful fee, commission, kickback
or other unlawful compensation or value of any kind has been or will be
received, retained or realized by any attorney, firm or other person or entity,
and no such unlawful items have been received, retained or realized by the
Seller or IUB;
(g) 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 the
consummation of the transactions contemplated hereby will not involve the
violation of any such laws;
(h) The Mortgage has not been satisfied, canceled,
subordinated (other than in connection with a refinancing of the first mortgage
on the Mortgaged Property) or rescinded, in whole or in part, and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole or in
part, nor has any instrument been executed that would effect any such release,
cancellation, subordination or rescission. Neither IUB nor the Seller has
waived the performance by the Mortgagor of any action, if the Mortgagor's
failure to perform such action would cause the Mortgage Loan to be in default,
nor has the Seller waived any default resulting from any action or inaction by
the Mortgagor;
(i) The Mortgaged Property is located in the state
identified in the Mortgage Loan Schedule and consists either of a fee simple
estate or, in the case of certain Mortgage Loans secured by Mortgaged Property
located in the State of Illinois, a land trust, in a single parcel of real
property improved by a one- to four-family residential dwelling or a
manufactured dwelling (non-mobile, as defined in the FNMA Selling Guide);
(j) The Mortgage is a valid, subsisting, enforceable and
perfected first or second lien on the Mortgaged Property, including all
buildings on the Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems located in or annexed
to such buildings, and all additions, alterations and replacements made at any
time with respect to the foregoing. The lien of the Mortgage is subject only
to:
(i) in the case of Mortgage Loans in a second
priority lien position, a first mortgage;
(ii) the lien of current real property taxes and
assessments not yet due and payable;
(iii) covenants, conditions and restrictions, rights
of way, easements and other matters of the public record as of the date of
recording acceptable to prudent mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy delivered to the
originator of the Mortgage Loan and referred to or otherwise considered in the
appraisal made for the originator of the Mortgage Loan; and
(iv) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
Except for those Mortgage Loans subject to a first mortgage Lien, any security
agreement, chattel mortgage or equivalent document related to and delivered in
connection with the Mortgage Loan establishes and creates a valid, subsisting
and enforceable first lien and first priority security interest on the property
described therein and immediately prior to the sale of such Mortgage Loan to the
Depositor pursuant to this Agreement, IUB had full right to sell and assign the
same to the Seller and the Seller had full right to sell and assign the same to
the Depositor. As of the date of origination of the Mortgage Loan, the
Mortgaged Property was not subject to a mortgage, deed of trust, deed to secure
debt or other security instrument creating a lien subordinate to the lien of the
Mortgage;
(k) The Mortgage Note and the Mortgage and every other
agreement, if any, executed and delivered by the Mortgagor in connection with
the Mortgage Loan are genuine, and each is the legal, valid and binding
obligation of the maker thereof enforceable in accordance with its terms. All
parties to the Mortgage Note and the Mortgage and any other related agreement
had legal capacity to enter into the Mortgage Loan and to execute and deliver
the Mortgage Note, the Mortgage and such other related agreements, and the
Mortgage Note and the Mortgage and such other related agreements have been duly
and properly executed by such parties. IUB and the Seller have reviewed, or
have caused to be reviewed, all of the documents constituting the Mortgage File
and have made such inquiries as it deems necessary to make and confirm the
accuracy of the representations set forth herein;
(l) The Mortgage Loan has been closed and any proceeds of
the Mortgage Loan drawn by the Mortgagor as of the Cut-Off Date have been fully
disbursed and there is no requirement for future advances thereunder (except
that the Mortgagor has the right to make additional drawings thereunder), and
any and all requirements as to completion of any on-site or off-site improvement
and as to disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making or closing the Mortgage Loan and
the recording of the Mortgage were paid, and the Mortgagor is not entitled to
any refund of any amounts paid or due under the Mortgage Note or Mortgage;
(m) Immediately prior to the sale of the Mortgage Loan to
the Depositor under this Agreement, (i) the Seller was the sole owner and holder
of the Mortgage Loan, (ii) the Mortgage Loan was not assigned to any Person
other than the Trustee on behalf of the Trust, or pledged, (iii) the Seller had
good, indefeasible and marketable title thereto, (iv) the Seller had full right
to transfer and sell the Mortgage Loan therein to the Depositor free and clear
of any encumbrance, equity interest, participation interest, lien, pledge,
charge, claim or security interest, and (v) the Seller had full right and
authority subject to no interest or participation of, or agreement with, any
other party, to sell and assign each Mortgage Loan to the Depositor under this
Agreement, and following the sale of each Mortgage Loan, the Depositor will own
such Mortgage Loan free and clear of any encumbrance, equity interest,
participation interest, lien, pledge, charge, claim or security interest;
(n) All parties which had any interest in the Mortgage Loan,
whether as mortgagee, assignee, pledgee or otherwise, and including, without
limitation, the Seller and IUB, to the best knowledge of the Seller, are (or,
during the period in which they held and disposed of such interest, were) (i)
in compliance with any and all applicable licensing requirements of the laws of
the state wherein the Mortgaged Property is located to the extent required to
avoid a material adverse effect to the interest of the Trustee on behalf of the
Certificateholders, (ii) (1) organized under the laws of such state, or (2)
qualified to do business in such state, or (3) federal savings and loan
associations, savings banks, or national banks having principal offices in such
state, or (4) not doing business in such state;
(o) The Mortgage Loan has an original Loan-to-Value ratio
(calculated at the time of origination by dividing the outstanding principal
amount of the Mortgage Loan by the appraised value of the Mortgaged Property)
equal to or less than 100%;
(p) Each Mortgage Loan (x) in a first lien position or (y)
having a principal balance of $15,000 or more and which has not been submitted
for a review of title after July 10, 1995, is covered by either (i) an
attorney's opinion of title and abstract of title or (ii) an ALTA lender's title
insurance policy or other generally acceptable form of policy of insurance
issued by a title insurer qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring IUB or the Seller, their successors and
assigns, as to the priority of its lien of the Mortgage in the original
principal amount of the Mortgage Loan, and subject only to the exceptions
contained in clauses (i), (ii), (iii) and (iv) of paragraph (j) above and
against any loss by reason of the invalidity or unenforceability of the lien
resulting from the provisions of the Mortgage. Where required by state law or
regulation, the Mortgagor has been given the opportunity to choose the carrier
of the required mortgage title insurance. Additionally, such lender's title
insurance policy affirmatively insures ingress and egress, and against
encroachments by or upon the Mortgaged Property or any interest therein.
Immediately prior to the sale of the Mortgage Loan to the Depositor under the
terms of this Agreement, the Seller, its successors and assigns were the sole
insureds of such lender's title insurance policy. Such lender's title insurance
policy is in full force and effect and will be in force and effect upon the
consummation of the transactions contemplated by this Agreement. No claims have
been made under such lender's title insurance policy, and no prior holder of the
Mortgage, including IUB or the Seller, has done, by act or omission, anything
which would impair the coverage of such lender's title insurance policy. In
connection with the issuance of such lender's title insurance policy, no
unlawful fee, commission, kickback or other unlawful compensation or value of
any kind has been or will be received, retained or realized by any attorney,
firm or other person or entity, and no such unlawful items have been received,
retained or realized by the Seller;
(q) To the best of Seller's knowledge, there is no default,
breach, violation or event of acceleration existing under the Mortgage or the
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 the Seller nor its predecessors
have waived any default, breach, violation or event of acceleration;
(r) To the best of the Seller's knowledge, after reasonable
due diligence, 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
the law could give rise to such liens) affecting the related Mortgaged Property
which are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage;
(s) To the best of Seller's knowledge, all improvements
which were considered in determining the Appraised Value of the Mortgaged
Property lay wholly within the boundaries and building restriction lines of the
Mortgaged Property and no improvements on adjoining properties encroach upon the
Mortgaged Property. To the best of Seller's knowledge, no improvement located
on or being part of the Mortgaged Property is in violation of any applicable
zoning law or regulation; provided, that in no event shall a legal nonconforming
use of the Mortgaged Property be considered a violation of any such zoning law
or regulation;
(t) The Mortgage Note is payable on the fifteenth day of
each month. The Mortgage Interest Rate and Monthly Payment are adjusted in
accordance with the terms of the Mortgage Note. All required notices of
interest rate and payment amount adjustments have been sent to the Mortgagor on
a timely basis and the computations of such adjustments were properly
calculated. Installments of interest are subject to change due to the
adjustments to the Mortgage Interest Rate on each Interest Adjustment Date, with
interest calculated and payable in arrears, sufficient to amortize the Mortgage
Loan fully by the stated maturity date over an original term of twenty years
from the closing date of the Mortgage Loan, however, the first ten years of
payments on the Mortgage Loan are not required to include principal payments but
are required to include at least the current interest due, calculated in
accordance with the applicable Mortgage Interest Rate. With respect to each
Mortgage Loan, the Payment Adjustments will be such that such Mortgage Loan will
fully amortize over twenty years notwithstanding any additions to the principal
balance of the Mortgage Loan due to capitalizing interest. All Mortgage
Interest Rate adjustments and Payment Adjustments have been made in strict
compliance with state and federal law and the terms of the related Mortgage
Note. Any interest required to be paid pursuant to state and local law has been
properly paid and credited;
(u) The Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the benefits of
the security provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise by judicial
foreclosure. Upon default by a Mortgagor on a Mortgage Loan and foreclosure on,
or trustee's sale of, the Mortgaged Property pursuant to the proper procedures,
the holder of the Mortgage Loan will be able to deliver good and merchantable
title to the Mortgaged Property. 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
subject to applicable federal and state laws and judicial precedent with respect
to bankruptcy and right of redemption;
(v) To the best of Seller's knowledge, all inspections,
licenses and certificates required to be made are issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including, but not limited to, certificates of occupancy
and fire underwriting certificates, have been made or obtained from the
appropriate authorities;
(w) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage referred to in
(j) above;
(x) In the event the Mortgage constitutes a deed of trust, a
trustee, authorized and duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the Trustee out
of the assets of the Trust Fund to the trustee under the deed of trust, except
in connection with a trustee's sale after default by the Mortgagor, provided
that this representation and warranty shall in no way obligate the Trustee to
pay any such amounts;
(y) The Mortgage Note, the Mortgage, the related Assignment
of Mortgage and any other documents required to be delivered by IUB or the
Seller have been delivered to the Trustee in accordance with Section 2.4 and
with Section 2.5(d). The Trustee is in possession of a complete, true and
accurate Mortgage File in accordance with Section 2.3;
(z) The Mortgage contains a provision for the acceleration
of the payment of the unpaid principal balance of the Mortgage Loan in the event
that the Mortgaged Property is sold or transferred without the prior written
consent of the Mortgagee thereunder, at the option of the Mortgagee;
(aa) Each of the Mortgage and the Assignment of Mortgage is
in recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located;
(ab) The Mortgage Loan does not contain provisions pursuant
to which Monthly Payments are paid or partially paid with funds deposited in any
separate account established by the Seller, the Mortgagor or anyone on behalf of
the Mortgagor, or paid by any source other than the Mortgagor, nor does it
contain any other similar provisions currently in effect which may constitute a
"buydown" provision. The Mortgage Loan is not a graduated payment mortgage loan
and the Mortgage Loan does not have a shared appreciation or other contingent
interest feature;
(ac) Any future advances or drawings on the Mortgage Loan
made prior to the Cut-Off Date have been consolidated with the outstanding
principal amount secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term. The lien
of the Mortgage securing the consolidated principal amount is expressly insured
as having first or second lien priority by a title insurance policy, an
endorsement to the policy insuring the mortgagee's consolidated interest or by
other title evidence acceptable to the Depositor. Any such consolidated
principal amount does not exceed the original principal amount of the Mortgage
Loan;
(ad) To the best of Seller's knowledge: there is no
proceeding pending or threatened for the total or partial condemnation of the
Mortgaged Property; the Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado, other types of water
damage, or other casualty so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the premises
were intended and each Mortgaged Property is in good repair; and there have not
been any condemnation proceedings with respect to the Mortgaged Property and the
Seller has no knowledge of any such proceedings in the future;
(ae) The origination and collection practices with respect to
the Mortgage Loan have been, and in all respects are in accordance with Accepted
Servicing Practices, and with all applicable laws and regulations. Any escrow
payments have been collected in full compliance with state and federal law.
Unless prohibited by applicable law, an escrow of funds has been established in
an amount sufficient to pay for every item which remains unpaid and which has
been assessed but is not yet due and payable, and all such escrowed funds are
held in the possession of the Servicer on behalf of the Trustee for the benefit
of the Certificateholders and the holder of the Exchangeable Certificate, and
there exist no deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. No escrow deposits or
escrow payments or other charges or payments due IUB or the Seller have been
capitalized under the Mortgage or the Mortgage Note;
(af) The Mortgage File contains an appraisal of the related
Mortgage Property signed prior to the approval of the Mortgage Loan application
by an appraiser acceptable to the Purchaser;
(ag) The Mortgagor has not notified IUB or the Seller, and
the Seller and IUB have no knowledge of any relief requested or allowed to the
Mortgagor under the Soldiers' and Sailors' Civil Relief Act of 1940;
(ah) To the best of the Seller's knowledge, there exists no
violation of any local, state, or federal environmental law, rule or regulation
in respect of the Mortgaged Property which violation has or could have a
material adverse effect on the market value of such Mortgaged Property. The
Seller has no knowledge of any pending action or proceeding directly involving
the related Mortgaged Property in which compliance with any environmental law,
rule or regulation is in issue; and, to the best of the Seller's knowledge,
nothing further remains to be done to satisfy in full all requirements of each
such law, rule or regulation constituting a prerequisite to the use and
employment of such Mortgaged Property;
(ai) No Mortgage Loan was made in connection with (i) the
construction of a Mortgaged Property or (ii) facilitating the trade-in or
exchange of a Mortgaged Property;
(aj) 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
the Seller has and shall maintain in its possession, available for the Trustee's
inspection, and shall deliver to the Trustee upon demand, evidence of compliance
with all such requirements;
(ak) The Mortgage Loans are representative of the mortgage
loans in the Seller's portfolio of adjustable rate home equity lines of credit
secured by one-to-four family properties;
(al) All information regarding the Mortgage Loans which could
reasonably be expected to adversely affect the value or the marketability of any
Mortgaged Property or Mortgage Loan and of which the Seller or IUB is aware has
been provided by the Seller to the Depositor and the Certificate Insurers;
(am) The Mortgage Loan was originated by a mortgagee which is
supervised and examined by a Federal or State authority. The Mortgage Loan was
originated in accordance with the underwriting criteria as described in the
Prospectus Supplement and was underwritten in strict accordance therewith. The
documents, instruments and agreements submitted for loan underwriting were not
falsified by or with the knowledge of the Seller and contain no untrue statement
of material fact and do not omit to state a material fact required to be stated
therein or necessary to make the information and statements therein not
misleading. Neither IUB nor the Seller has made any representations to the
Mortgagor that are inconsistent with the mortgage instruments used;
(an) All amounts, with respect to the Mortgage Loans,
received after the Cut-Off Date and to which the Seller is not entitled, have
been deposited into the Trustee Collection Account;
(ao) To the best of the Seller's knowledge after due inquiry,
there is no delinquent recording or other tax or assessment lien on the Mortgage
Property;
(ap) The Seller has performed or directed the Servicer to
perform any and all acts required to be performed to preserve the rights and
remedies of the Trustee in any insurance policies applicable to the Mortgage
Loan, including, without limitation, any necessary notification of insurers,
assignments of policies (other than the title policy) or interests therein, and
establishment of co-insurer, joint loan payer and mortgagee rights in favor of
the Trustee;
(aq) The Mortgage Loan conforms, and all such Mortgage Loans
in the aggregate conform, to the description thereof set forth in the Prospectus
Supplement;
(ar) [Reserved];
(as) With respect to any Mortgage Loan that is located in any
of the 39 counties in California that have been declared federal disaster areas
due to flooding that has occurred in January, February and March 1995, if the
Seller, acting reasonably, has reason to believe that any Mortgaged Property has
been affected by flooding, the Seller will cause the Servicer to contact the
related obligor regarding the condition of the related property. The Servicer
shall be required to contact the related obligor regarding the condition of such
Mortgaged Property if such obligor shall be five or more days late in making a
payment on the Mortgage Loan;
(at) As of the Cut-Off Date, no more than 0.70% of the
Mortgage Loans will be secured by Mortgaged Properties located within any single
zip code area;
(au) Approximately 0.46% of the outstanding principal balance
of the Mortgage Loans are non-owner occupied or second homes;
(av) Each Mortgage Loan constitutes a Qualified Mortgage, as
defined in the Pooling and Servicing Agreement;
(aw) Each Mortgaged Property does not include cooperatives or
mobile homes attached to a foundation or otherwise and does not constitute other
than real property under state law;
(ax) With respect to each Mortgage Loan, there is only one
originally executed Mortgage Note not stamped as a duplicate;
(ay) There do not exist any circumstances or conditions with
respect to the Mortgage, the Mortgaged Property, the Mortgagor or the
Mortgagor's credit standing that can reasonably be expected to cause private
institutional investors to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent, or adversely affect
the value or marketability of the Mortgage Loan;
(az) No statement, report or other document constituting a
part of the Mortgage File contains any untrue statement of fact or omits to
state a fact necessary to make the statements contained therein not misleading;
(ba) At the time of the origination of each Mortgage Loan
that is not a first mortgage loan, the related prior lien was not more than 30
days or more delinquent;
(bb) As of the Closing Date, there is no valid offset,
defense or counterclaim to any Mortgage Loan Agreement or Mortgage, including,
without limitation, any offset, defense, or counterclaim against the obligation
to pay principal and interest in accordance with the Mortgage Loan Agreement;
(bc) As of the Closing Date, each Mortgage Loan and Mortgage
is an enforceable obligation of the related Mortgagor, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be limited by
general principals of equity (whether considered in a proceeding at law or in
equity); no instrument of release or waiver has been executed in connection with
any Mortgage Loan and no Mortgagor has been released, in whole or in part;
(bd) The Mortgage Loans are not being transferred with any
intent to hinder, delay or defraud any creditors;
(be) As of the Closing Date, the Seller has not received, and
is not aware of, a notice of default of any senior mortgage loan related to a
Mortgaged Property which has not been cured;
(bf) No selection procedure reasonably believed by the Seller
to be materially adverse to the interests of the Certificateholders or the
Certificate Insurer was utilized in selecting the Mortgage Loans; and
(bg) Each Mortgage was recorded, and, except for the blanket
assignments made pursuant to Section 2.3(a)(iii) of the Pooling and Servicing
Agreement, all subsequent assignments of the original Mortgage have been
recorded in the appropriate jurisdictions wherein such recordation is necessary
to perfect the lien thereof as against creditors of the Seller.
Section 3.3 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Seller, as of the
date of execution of this Agreement and the Closing Date, that:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to
purchase each Mortgage Loan and to execute, deliver and perform, and to enter
into and consummate all the transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Depositor, and, assuming the due authorization,
execution and delivery hereof by the Seller, constitutes the legal, valid and
binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority or court
is required for the execution, delivery and performance of or compliance by the
Depositor with this Agreement or the consummation by the Depositor of any of the
transactions contemplated hereby, except such as have been made on or prior to
the Closing Date;
(e) The Depositor has filed or will file the Prospectus and
Prospectus Supplement with the Commission in accordance with Rule 424(b) under
the Securities Act; and
(f) None of the execution and delivery of this Agreement,
the purchase of the Mortgage Loans from the Seller, the consummation of the
other transactions contemplated hereby, or the fulfillment of or compliance with
the terms and conditions of this Agreement, (i) conflicts or will conflict with
the charter or bylaws of the Depositor or conflicts or will conflict with or
results or will result in a breach of, or constitutes or will constitute a
default or results or will result in an acceleration under, any term, condition
or provision of any indenture, deed of trust, contract or other agreement or
other instrument to which the Depositor is a party or by which it is bound and
which is material to the Depositor, or (ii) results or will result in a
violation of any law, rule, regulation, order, judgment or decree of any court
or governmental authority having jurisdiction over the Depositor.
Section 3.4 Repurchase Obligation for Defective
Documentation and for Breach of a Representation or Warranty. (a) Each of the
representations and warranties contained in Sections 3.1 and 3.2 shall survive
the purchase by the Depositor of the Mortgage Loans and the subsequent transfer
thereof by the Depositor to the Trustee and shall continue in full force and
effect, notwithstanding any restrictive or qualified endorsement on the Mortgage
Notes and notwithstanding subsequent termination of this Agreement or the
Pooling and Servicing Agreement.
(b) With respect to any representation or warranty contained
in Section 3.1 or 3.2 hereof that is made to the best of the Seller's knowledge,
if it is discovered by the Servicer, any subservicer, the Trustee, the
Certificate Insurer or any Certificateholder or the holder of the Exchangeable
Certificate that the substance of such representation and warranty was
inaccurate as of the Closing Date and such inaccuracy materially and adversely
affects the value of the related Mortgage Loan, then notwithstanding the
Seller's lack of knowledge with respect to the inaccuracy at the time the
representation or warranty was made, such inaccuracy shall be deemed a breach of
the applicable representation or warranty. Upon discovery by the Seller, the
Servicer, any subservicer, the Trustee, the Certificate Insurer or any
Certificateholder or the holder of the Exchangeable Certificate of a breach of
any of such representations and warranties which materially and adversely
affects the value of Mortgage Loans or the interest of the Certificateholders or
the holder of the Exchangeable Certificate, or which materially and adversely
affects the interests of the Certificate Insurer, the Certificateholders or the
holder of the Exchangeable Certificate in the related Mortgage Loan in the case
of a representation and warranty relating to a particular Mortgage Loan
(notwithstanding that such representation and warranty was made to the Seller's
best knowledge), the party discovering such breach shall, pursuant to Section
3.3 of the Pooling and Servicing Agreement, give prompt written notice to the
others. Subject to the next to last paragraph of this Section 3.4, within 60
days of the earlier of its discovery or its receipt of notice of any breach of a
representation or warranty, the Seller shall (i) promptly cure such breach in
all material respects, or (ii) purchase such Mortgage Loan at a purchase price
equal to the Principal Balance of such Mortgage Loan as of the date of purchase,
plus the greater of (1) all accrued and unpaid interest on such Principal
Balance and (2) 30 days' interest on such Principal Balance, computed at the
Mortgage Interest Rate, plus the amount of any unreimbursed Servicing Advances
made by the Servicer with respect to such Mortgage Loan, or (iii) cause the
removal of such Mortgage Loan from the Trust Fund (in which case it shall become
a Deleted Mortgage Loan) and substitute one or more Qualified Substitute
Mortgage Loans; provided, that, such substitution is effected not later than the
date which is 2 years after the Startup Day or at such later date, if the
Trustee and the Certificate Insurer receive an Opinion of Counsel to the effect
set forth below in this Section. Any such substitution shall be accompanied by
payment by the Seller of the Substitution Adjustment, if any, to be deposited in
the Collection Account or the Trustee Collection Account pursuant to the Pooling
and Servicing Agreement.
(c) As to any Deleted Mortgage Loan for which the Seller
substitutes, or has caused to be substituted therefor, a Qualified Substitute
Mortgage Loan or Loans, the Seller shall effect, or shall cause to be effected,
such substitution by delivering, or causing the delivery, to the Trustee a
certification in the form attached to the Pooling and Servicing Agreement as
Exhibit H, executed by a Servicing Officer of the Servicer and the documents
described in Section 2.4(a) for such Qualified Substitute Mortgage Loan or
Loans. Pursuant to the Pooling and Servicing Agreement, upon receipt by the
Trustee of a certification of a Servicing Officer of the Servicer of such
substitution or purchase and, in the case of a substitution, upon receipt of the
related Trustee's Mortgage File, and the deposit of certain amounts in the
Trustee Collection Account pursuant to Section 2.4(b) of the Pooling and
Servicing Agreement (which certification shall be in the form of Exhibit H to
the Pooling and Servicing Agreement), the Trustee shall be required to release
to the Servicer for release to the Seller the related Trustee's Mortgage File
and shall be required to execute, without recourse, and deliver such instruments
of transfer furnished by the Seller as may be necessary to transfer such
Mortgage Loan to the Seller.
(d) Pursuant to the Pooling and Servicing Agreement, the
Servicer has agreed to deposit in the Trustee Collection Account all payments
received in connection with such Qualified Substitute Mortgage Loan or Loans
after the date of such substitution. Monthly Payments received with respect to
Qualified Substitute Mortgage Loans on or before the date of substitution will
be retained by the Seller. The Trust Fund will own all payments received on the
Deleted Mortgage Loan on or before the date of substitution, and the Seller
shall thereafter be entitled to retain all amounts subsequently received in
respect of such Deleted Mortgage Loan. Pursuant to the Pooling and Servicing
Agreement, the Servicer shall be required to give written notice to the Trustee
and the Certificate Insurer that such substitution has taken place and shall
amend the Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage
Loan from the terms of the Pooling and Servicing Agreement and the substitution
of the Qualified Substitute Mortgage Loan. The parties hereto agree to amend
the Mortgage Loan Schedule accordingly. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall be subject to the terms of the Pooling
and Servicing Agreement and this Agreement in all respects, and the Seller shall
be deemed to have made with respect to such Qualified Substitute Mortgage Loan
or Loans, as of the date of substitution, the representations and warranties set
forth in Sections 3.1 and 3.2 herein. On the date of such substitution, the
Seller will remit, or will cause to be remitted, to the Servicer and pursuant to
the Pooling and Servicing Agreement the Servicer will deposit into the Trustee
Collection Account an amount equal to the Substitution Adjustment, if any.
(e) It is understood and agreed that the obligations of the
Seller set forth in Section 2.5 and this Section 3.4 to cure, purchase or
substitute for a defective Mortgage Loan as provided in Section 2.5 and this
Section 3.4 constitute the sole remedies of the Depositor, the Trustee, the
Certificate Insurer and the Certificateholders and the holder of the
Exchangeable Certificate respecting a breach of the foregoing representations
and warranties (other than the representation and warranty set forth in Section
3.2(g) to the extent of any fines, penalties, costs, or other damages or losses
other than the lost economic value of the Mortgage Loan, the value of which the
remedies provided for in Section 2.5 and 3.4 shall be deemed adequate for).
(f) Any cause of action against the Seller relating to or
arising out of the breach of any representations and warranties or covenants
made in Section 2.5, 3.1, or 3.2 or this Section 3.4 shall accrue as to any
Mortgage Loan upon (i) discovery of such breach by any party and notice thereof
to the Seller, (ii) failure by the Seller to cure such breach or purchase or
substitute such Mortgage Loan as specified above, and (iii) demand upon the
Seller by the Trustee for all amounts payable in respect of such Mortgage Loan.
(g) Notwithstanding any contrary provision of this
Agreement, with respect to any Mortgage Loan which is not in default or as to
which no default is imminent, no purchase, or substitution pursuant to Section
2.5(b) or this Section 3.4 shall be made unless the Seller provides to the
Trustee and the Certificate Insurer an Opinion of Counsel to the effect that
such purchase or substitution would not (i) result in the imposition of taxes on
"prohibited transactions" of the REMIC Trust, as defined in Section 860F of the
Code or a tax on contributions to the REMIC Trust under the REMIC Provisions, or
(ii) cause the REMIC Fund to fail to qualify as a REMIC at any time that any
Certificates are outstanding. Any Mortgage Loan as to which purchase or
substitution was delayed pursuant to this paragraph shall be purchased or
substituted (subject to compliance with Section 2.5 and this Section 3.4) upon
the earlier of (1) the occurrence of a default or imminent default with respect
to such loan and (2) receipt by the Trustee and the Certificate Insurer of an
Opinion of Counsel to the effect that such purchase or substitution will not
result in the events described in clauses (i) and (ii) of the preceding
sentence.
(h) Pursuant to the Pooling and Servicing Agreement, upon
discovery by the Seller, the Servicer, the Trustee, the Certificate Insurer or
any Certificateholder or the holder of the Exchangeable Certificate that any
Mortgage Loan does not constitute a Qualified Mortgage, the party discovering
such fact shall promptly (and in any event within 5 days of the discovery) give
written notice thereof to the other parties. In connection therewith, the
Seller shall repurchase or substitute a Qualified Substitute Mortgage Loan for
the affected Mortgage Loan within 60 days of the earlier of such discovery by
any of the foregoing parties, or the Trustee's or the Seller's receipt of
notice, in the same manner as it would a Mortgage Loan for a breach of
representation or warranty contained in Section 3.1 or 3.2. Pursuant to the
Pooling and Servicing Agreement the Trustee shall reconvey to the Seller the
Mortgage Loan to be released pursuant hereto in the same manner, and on the same
terms and conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Section 3.1 or 3.2 hereof.
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ARTICLE IV
THE SELLER
Section 4.1 Covenants of the Seller. The Seller covenants
to the Depositor as follows:
(a) The Seller shall cooperate with the Depositor and the
firm of independent certified public accountants retained with respect to the
issuance of the Certificates in making available all information and taking all
steps reasonably necessary to permit the accountants' letters required hereunder
to be delivered within the times set for delivery herein.
(b) The Seller agrees to satisfy or cause to be satisfied on
or prior to the Closing Date, all of the conditions to the Depositor's
obligations set forth in Section 5.1 hereof that are within the Seller's (or its
agents') control.
(c) The Seller hereby agrees to do all acts, transactions,
and things and to execute and deliver all agreements, documents, instruments,
and papers by and on behalf of the Seller as the Depositor or its counsel may
reasonably request in order to consummate the transfer of the Mortgage Loans to
the Depositor and the subsequent transfer thereof to the Trustee, and the
rating, issuance and sale of the Certificates.
Section 4.2 Merger or Consolidation. The Seller will keep
in full effect its existence, rights and franchises as a corporation and will
obtain and preserve its qualification to do business as a foreign corporation,
in each jurisdiction necessary to protect the validity and enforceability of
this Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement.
Section 4.3 Costs. In connection with the transactions
contemplated under this Agreement and the Pooling and Servicing Agreement, the
Seller shall promptly pay or cause the Servicer to pay (or shall promptly
reimburse the Depositor to the extent that the Depositor shall have paid or
otherwise incurred):
(a) the fees and disbursements of the transaction counsel,
Skadden, Arps, Slate, Meagher & Flom;
(b) the initial (but not ongoing) fees of Standard & Poor's
Ratings Services and Moody's Investors Service, Inc.;
(c) any of the fees of the Trustee as provided in the letter
from the Trustee to the Depositor and the Servicer dated as of December 4, 1995
to the extent such fees are not paid pursuant to Section 6.5 of the Pooling and
Servicing Agreement, the fees and disbursements of the Trustee's counsel, if
any, the fees and expenses of the institution (which may, but need not, be the
Servicer or the Trustee) selected as calculating agent and the fees of the
Trustee for custodial acceptance and loan deposit;
(d) expenses incurred in connection with printing the
Prospectus Supplement, any amendment or supplement thereto, any preliminary
prospectus and the Certificates;
(e) fees and expenses relating to the filing of documents
with the Securities and Exchange Commission (including, without limitation,
periodic reports under the Exchange Act and registration fees for the issuance
of the Certificates);
(f) [Reserved];
(g) all of the initial expenses of the Certificate Insurer,
including, without limitation, legal fees and expenses, accountant fees and
expenses and expenses in connection with due diligence conducted on the Mortgage
Files; and
(h) (without duplication to clause (c) hereof) the Trustee's
fees and expenses, including, without limitation, all of the Trustee's fees and
expenses in connection with any actions taken by the Trustee pursuant to Section
9.2(a)(v) of the Pooling and Servicing Agreement.
For the avoidance of doubt, the parties hereto acknowledge that it is the
intention of the parties that the Depositor shall not pay any of the Trustee's
fees and expenses in connection with the transactions contemplated by the
Pooling and Servicing Agreement. All other costs and expenses in connection
with the transactions contemplated hereunder shall be borne by the party
incurring such expenses.
Section 4.4 Indemnification. (a) (i) The Seller agrees to
indemnify and hold harmless the Depositor, each of its directors, each of its
officers who have signed the Registration Statement, and each of its directors
and each person or entity who controls the Depositor or any such person, within
the meaning of Section 15 of the Securities Act, against any and all losses,
claims, damages or liabilities, joint and several, to which the Depositor or any
such person or entity may become subject, under the Securities Act or otherwise,
and will reimburse the Depositor and each such controlling person for any legal
or other expenses incurred by the Depositor or such controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Prospectus
Supplement or any amendment or supplement to the Prospectus Supplement or the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements in the Prospectus Supplement
or any amendment or supplement to the Prospectus Supplement approved in writing
by the Seller, in light of the circumstances under which they were made, not
misleading, but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission relates to the information contained
in the Prospectus Supplement referred to in Section 3.1(d) hereof. This
indemnity agreement will be in addition to any liability which the Seller may
otherwise have.
(ii) The Seller agrees to indemnify and to hold the Depositor
harmless against any and all claims, losses, penalties, fines, forfeitures,
legal fees and related costs, judgments, and any other costs, fees and expenses
that the Depositor may sustain in any way related to the failure of the Seller
to perform its duties in compliance with the terms of this Agreement. The
Seller shall immediately notify the Depositor if a claim is made by a third
party with respect to this Agreement, and the Seller shall have the right to
assume the defense of any such claim and will pay or cause to be paid all
expenses in connection therewith, including reasonable counsel fees, and will
promptly pay or cause to be paid, discharged and satisfied any judgment or
decree which may be entered against the Depositor in respect of such claim.
Pursuant to the Pooling and Servicing Agreement, the Trustee shall reimburse the
Seller in accordance with the Pooling and Servicing Agreement for all amounts
advanced by the Seller pursuant to the preceding sentence except when the claim
relates directly to the failure of the Seller to perform its duties in
compliance with the terms of this Agreement.
(b) The Depositor agrees to indemnify and hold harmless the
Seller, each of its directors and each person or entity who controls the Seller
or any such person, within the meaning of Section 15 of the Securities Act,
against any and all losses, claims, damages or liabilities, joint and several,
to which the Seller or any such person or entity may become subject, under the
Securities Act or otherwise, and will reimburse the Seller and any such director
or controlling person for any legal or other expenses incurred by the Seller or
any such director or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) (i) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, the
Prospectus Supplement, any amendment or supplement to the Prospectus or the
Prospectus Supplement or the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission is other than a statement or omission
relating to the information set forth in subsection (a)(i) of this Section 4.4.
This indemnity agreement will be in addition to any liability which the
Depositor may otherwise have or (ii) result directly from a determination that
the Trust will not be treated as a REMIC and the Class A Certificates will not
be treated as "regular interests" in such REMIC.
(c) Promptly after receipt by an indemnified party under
this Section 4.4 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 4.4, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent such
indemnifying party has been prejudiced thereby. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying
party to such indemnified party of its election to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party under this
Section 4.4 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. The indemnifying party shall not be liable for
the expenses of more than one separate counsel.
(d) In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 4.4 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or
subsection (b) of this Section 4.4 in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof); provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the relative benefits received by the Seller on the one hand, and the
Depositor on the other, the Seller's and the Depositor's relative knowledge and
access to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or omission, and
any other equitable considerations appropriate in the circumstances. The Seller
and the Depositor agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation. For purposes
of this Section 4.4, each director of the Depositor, each officer of the
Depositor who signed the Registration Statement, and each person, if any who
controls the Depositor within the meaning of Section 15 of the Securities Act,
shall have the same rights to contribution as the Depositor, and each director
of the Seller, and each person, if any who controls the Seller within the
meaning of Section 15 of the Securities Act, shall have the same rights to
contribution as the Seller.
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ARTICLE V
CONDITIONS OF CLOSING
Section 5.1 Conditions of Depositor's Obligations. The
obligations of the Depositor to purchase the Mortgage Loans will be subject to
the satisfaction on the Closing Date of the following conditions. Upon payment
of the purchase price for the Mortgage Loans, such conditions shall be deemed
satisfied or waived.
(a) Each of the obligations of the Seller required to be
performed by it on or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Seller under this Agreement shall be true
and correct as of the Closing Date and no event shall have occurred which, with
notice or the passage of time, would constitute a default under this Agreement,
and the Depositor shall have received a certificate to the effect of the
foregoing signed by an authorized officer of the Seller.
(b) The Depositor shall have received a letter dated the
date of this Agreement, in form and substance acceptable to the Depositor and
its counsel, prepared by Coopers & Lybrand, independent certified public
accountants, regarding the numerical information contained in the Prospectus
Supplement.
(c) The Mortgage Loans will be acceptable to the Depositor,
in its sole discretion.
(d) The Depositor shall have received the following
additional closing documents, in form and substance satisfactory to the
Depositor and its counsel:
(i) the Mortgage Loan Schedule and an executed
receipt acknowledging delivery of the Mortgage Loans to the Trustee;
(ii) the Pooling and Servicing Agreement dated as of
December 6, 1995 and the Underwriting Agreement dated as of December 1, 1995
between the Depositor and Prudential Securities Incorporated and all documents
required thereunder, duly executed and delivered by each of the parties thereto
other than the Depositor;
(iii) an officer's certificate, dated as of the
Closing Date, in the form of Exhibit B hereto, and attached thereto resolutions
of the board of directors of the Seller and a copy of the charter and by-laws of
the Seller;
(iv) copy of the Seller's charter and all amendments,
revisions, and supplements thereof, certified by the Secretary of the Seller;
(v) an opinion of the counsel for the Seller as to
various corporate matters substantially in the form attached hereto as Exhibit C
(it being agreed that the opinion shall expressly provide that the Trustee shall
be entitled to rely on the opinion);
(vi) opinions of counsel for the Seller, in forms
acceptable to the Depositor, its counsel, S&P and Moody's as to such matters as
shall be required for the assignment of a rating to the Class A Certificates of
AAA by S&P's Ratings Services and Aaa by Moody's Investors Service, Inc. (it
being agreed that such opinions shall expressly provide that the Trustee shall
be entitled to rely on such opinions);
(vii) a letter from Moody's that it has assigned a
rating of Aaa to the Class A Certificates;
(viii) a letter from S&P that it has assigned a rating
of AAA to the Class A Certificates;
(ix) an opinion of counsel for the Trustee in form
and substance acceptable to the Depositor, its counsel, Moody's and S&P (it
being agreed that the opinion shall expressly provide that the Seller shall be
entitled to rely on the opinion);
(x) an opinion or opinions of counsel for the
Servicer, in form and substance acceptable to the Depositor, its counsel,
Moody's and S&P (it being agreed that the opinion shall expressly provide that
the Seller shall be entitled to rely on the opinion);
(xi) an opinion or opinions of counsel for the
Certificate Insurer, in each case in form and substance acceptable to the
Depositor, its counsel, Moody's and S&P (it being agreed that the opinion shall
expressly provide that the Seller shall be entitled to rely on the opinion); and
(xii) [Reserved].
(e) The Certificate Insurance Policy shall have been duly
executed, delivered and issued with respect to the Certificates.
(f) All proceedings in connection with the transactions
contemplated by this Agreement and all documents incident hereto shall be
satisfactory in form and substance to the Depositor and its counsel.
(g) The Seller shall have furnished the Depositor with such
other certificates of its officers or others and such other documents or
opinions as the Depositor or its counsel may reasonably request.
Section 5.2 Conditions of Seller's Obligations. The
obligations of the Seller under this Agreement shall be subject to the
satisfaction, on the Closing Date, of the following conditions:
(a) Each of the obligations of the Depositor required to be
performed by it at or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Depositor contained in this Agreement
shall be true and correct as of the Closing Date and the Seller shall have
received a certificate to that effect signed by an authorized officer of the
Depositor.
(b) The Seller shall have received the following additional
documents:
(i) the Pooling and Servicing Agreement, and all
documents required thereunder, in each case executed by the Depositor as
applicable; and
(ii) a copy of a letter from Moody's to the Depositor
to the effect that it has assigned a rating of Aaa to the Class A Certificates
and a copy of a letter from S&P to the Depositor to the effect that it has
assigned a rating of AAA to the Class A Certificates.
(c) The Seller shall have received an executed receipt,
acknowledging the delivery of the Mortgage Loans and the Mortgage Loan Schedule
to the Trustee.
(d) The Depositor shall have furnished the Seller with such
other certificates of its officers or others and such other documents to
evidence fulfillment of the conditions set forth in this Agreement as the Seller
may reasonably request.
Section 5.3 Termination of Depositor's Obligations. The
Depositor may terminate its obligations hereunder by notice to the Seller at any
time before delivery of and payment of the purchase price for the Mortgage Loans
if: (a) any of the conditions set forth in Section 5.1 are not satisfied when
and as provided therein; (b) there shall have been the entry of a decree or
order by a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Seller, or for the winding up or
liquidation of the affairs of the Seller; (c) there shall have been the consent
by the Seller to the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Seller or of or relating to
substantially all of the property of the Seller; (d) any purchase and assumption
agreement with respect to the Seller or the assets and properties of the Seller
shall have been entered into; or (e) a Termination Event shall have occurred.
The termination of the Depositor's obligations hereunder shall not terminate the
Depositor's rights hereunder or its right to exercise any remedy available to it
at law or in equity.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Notices. All demands, notices and
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered to or mailed by registered mail, postage
prepaid, or transmitted by telex or telegraph and confirmed by a similar mailed
writing, if to the Depositor, addressed to the Depositor at Prudential
Securities Secured Financing Corporation, 199 Water Street, 26th Floor, New
York, New York 10292, Attention: Mr. John Heeger, or to such other address as
the Depositor may designate in writing to the Seller and if to the Seller,
addressed to the Seller c/o Irwin Financial Corporation, 500 Washington Street,
Columbus, Indiana, 47201 Attention Mr. Matthew F. Souza, with a copy to be
provided simultaneously to Irwin Home Equity Corporation, 2400 Camino Ramon,
Suite 375, San Ramon, California 94583 Attention: Mr. Edwin Corbin, or to such
other address as the Seller may designate in writing to the Depositor.
Section 6.2 Severability of Provisions. Any part,
provision, representation, warranty or covenant of this Agreement which is
prohibited or which is held to be void or unenforceable shall be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation, warranty or
covenant of this Agreement which is prohibited or unenforceable or is held to be
void or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction as to any Mortgage Loan shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the parties hereto waive any provision
of law which prohibits or renders void or unenforceable any provision hereof.
Section 6.3 Agreement of Seller. The Seller agrees to
execute and deliver such instruments and take such actions as the Depositor may,
from time to time, reasonably request in order to effectuate the purpose and to
carry out the terms of this Agreement.
Section 6.4 Survival. The parties to this Agreement agree
that the representations, warranties and agreements made by each of them herein
and in any certificate or other instrument delivered pursuant hereto shall be
deemed to be relied upon by the other party hereto, notwithstanding any
investigation heretofore or hereafter made by such other party or on such other
party's behalf, and that the representations, warranties and agreements made by
the parties hereto in this Agreement or in any such certificate or other
instrument shall survive the delivery of and payment for the Mortgage Loans.
Section 6.5 Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 6.6 Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Except as expressly permitted by
the terms hereof, this Agreement may not be assigned, pledged or hypothecated by
any party hereto to a third party without the written consent of the other party
to this Agreement and the Certificate Insurer; provided, however, that the
Depositor may assign its rights hereunder without the consent of the Seller.
Section 6.7 Confirmation of Intent; Grant of Security
Interest. It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Seller to the Depositor as contemplated by this
Purchase and Sale Agreement be, and be treated for all purposes as, a sale by
the Seller to the Depositor of the Mortgage Loans. It is, further, not the
intention of the parties that such conveyance be deemed a pledge of the Mortgage
Loans by the Seller to the Depositor to secure a debt or other obligation of the
Seller. However, in the event that, notwithstanding the intent of the parties,
the Mortgage Loans are held to continue to be property of the Seller then (a)
this Purchase and Sale Agreement shall also be deemed to be a security agreement
within the meaning of Articles 8 and 9 of the Uniform Commercial Code; (b) the
transfer of the Mortgage Loans provided for herein shall be deemed to be a grant
by the Seller to the Depositor of, and the Seller hereby does grant, a security
interest in all of the Seller's right, title and interest in and to the Mortgage
Loans and all amounts payable on the Mortgage Loans in accordance with the terms
thereof and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property to secure a loan
from the Depositor in the amount equal to the purchase price described in
Section 2.2 hereof; (c) the possession by the Depositor of Mortgage Notes and
such other items of property as constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party" for purposes of perfecting the security interest pursuant to Section
9-305 of the Uniform Commercial Code; and (d) notifications to persons holding
such property, and acknowledgments, receipts or confirmations from persons
holding such property, shall be deemed notifications to, or acknowledgments,
receipts or confirmations from, financial intermediaries, bailees or agents (as
applicable) of the Depositor for the purpose of perfecting such security
interest under applicable law. Any assignment of the interest of the Depositor
pursuant to any provision hereof shall also be deemed to be an assignment of any
security interest created hereby. The Seller and the Depositor shall, to the
extent consistent with this Purchase and Sale Agreement, take such actions as
may be necessary to ensure that, if this Purchase and Sale Agreement were deemed
to create a security interest in the Mortgage Loans, such security interest
would be deemed to be a perfected security interest of first priority under
applicable law and will be maintained as such throughout the term of this
Agreement.
Section 6.8 Miscellaneous. This Agreement supersedes all
prior agreements and understandings relating to the subject matter hereof.
Section 6.9 Amendments. (a) This Agreement may be amended
from time to time by the Seller and the Depositor by written agreement, upon the
prior written consent of the Certificate Insurer (which consent shall not be
withheld if, in the Opinion of Counsel addressed to the Trustee and the
Certificate Insurer, failure to amend would adversely affect the interests of
the Certificateholders, unless such amendment would adversely affect the
interests of the Certificate Insurer), without notice to or consent of the
Certificateholders to cure any ambiguity, to correct or supplement any
provisions herein, to comply with any changes in the Code, or to make any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with the provisions of this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel, at
the expense of the party requesting the change, delivered to the Trustee,
adversely affect in any material respect the interests of any Certificateholder;
and provided, further, that no such amendment shall reduce in any manner the
amount of, or delay the timing of, payments received on Mortgage Loans which are
required to be distributed on any Certificate without the consent of the Holder
of such Certificate, or change the rights or obligations of any other party
hereto without the consent of such party.
(b) This Agreement may be amended from time to time by the
Seller and the Depositor with the consent of the Certificate Insurer (which
consent shall not be withheld if, in the Opinion of Counsel addressed to the
Trustee and the Certificate Insurer, failure to amend would adversely affect the
interests of the Certificateholders, unless such amendment would adversely
affect the interests of the Certificate Insurer), the Majority
Certificateholders and the Holders of the majority of the Percentage Interest in
the Class R Certificates for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders; provided, however, that no
such amendment shall be made unless the Trustee receives an Opinion of Counsel,
at the expense of the party requesting the change, that such change will not
adversely affect the status of the REMIC Trust as a REMIC or cause a tax to be
imposed on the REMIC; and provided, further, that no such amendment shall reduce
in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate or reduce the percentage for each
Class the Holders of which are required to consent to any such amendment without
the consent of the Holders of 100% of each Class of Certificates affected
thereby.
(c) It shall not be necessary for the consent of Holders
under this Section to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof.
Section 6.10 Third-Party Beneficiaries. The parties agree
that each of the Certificate Insurer and the Trustee is an intended third-party
beneficiary of this Agreement to the extent necessary to enforce the rights and
to obtain the benefit of the remedies of the Depositor under this Agreement
which are assigned to the Trustee for the benefit of the Certificateholders and
the Certificate Insurer pursuant to the Pooling and Servicing Agreement and to
the extent necessary to obtain the benefit of the enforcement of the obligations
and covenants of the Seller under Sections 4.1 and 4.4(a)(ii) of this Agreement.
The parties further agree that Prudential Securities Incorporated and each of
its directors and each person or entity who controls Prudential Securities
Incorporated or any such person, within the meaning of Section 15 of the
Securities Act (each, an "Underwriter Entity") is an intended third-party
beneficiary of this Agreement to the extent necessary to obtain the benefit of
the enforcement of the obligations and covenants of the Seller with respect to
each Underwriter Entity under Section 4.4(a)(i) of this Agreement.
Section 6.11 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER
OF JURY TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF NEW YORK.
(b) THE DEPOSITOR AND THE SELLER EACH HEREBY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND
EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS
SET FORTH IN SECTION 6.1 OF THIS AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED
TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S.
MAILS, POSTAGE PREPAID. THE DEPOSITOR AND THE SELLER EACH HEREBY WAIVE ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE DEPOSITOR AND THE SELLER TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR AFFECT EITHER'S RIGHT TO BRING ANY ACTION
OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(c) THE DEPOSITOR AND THE SELLER EACH HEREBY WAIVE ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
Section 6.12 Execution in Counterparts. This Agreement may
be executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties to this Purchase and Sale
Agreement have caused their names to be signed by their respective officers
thereunto duly authorized as of the date first above written.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION, as Depositor
By: /s/ JOHN HEEGER
-------------------------
Name: John Heeger
Title: Vice President
IHE FUNDING CORP., as Seller
By: /s/ GREGORY F. EHLINGER
---------------------------
Name: Gregory F. Ehlinger
Title: Vice President & Treasurer
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On December 6, 1995 before me, the undersigned, a Notary Public
in and for said County and State, personally appeared John Heeger, personally
known to me (or proved to me on the basis of satisfactory evidence) to be Vice
President [title] of Prudential Securities Secured Financing Corporation, a
Delaware corporation, the corporation that executed the within Purchase and Sale
Agreement on behalf of said corporation, and acknowledged to me that said
corporation executed it.
/s/ ANN JANOWSKY
-----------------------
Notary Public
My Commission expires: July 18, 1996
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On December 6, 1995 before me, the undersigned, a Notary Public
in and for said County and State, personally appeared Gregory Ehlinger,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be Vice President & Treasurer [title] of IHE Funding Corp., the entity that
executed the within Purchase and Sale Agreement; on behalf of said corporation,
and acknowledged to me that said corporation executed it.
/s/ ANN JANOWSKY
------------------------------
Notary Public
My Commission expires: July 18, 1996
MORTGAGE LOAN SALE AGREEMENT
IHE FUNDING CORP.
PURCHASER
and
IRWIN UNION BANK AND TRUST COMPANY
SELLER
Dated as of December 6, 1995
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Definitions ............................ 2
ARTICLE II
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS
Section 2.1 Agreement to Purchase .................. 6
Section 2.2 Purchase Price ........................ 6
Section 2.3 Conveyance of Mortgage Loans;
Possession of Mortgage Files ........... 6
Section 2.4 Delivery of Mortgage Loan
Documents .............................. 7
Section 2.5 Acceptance of Mortgage Loans ........... 10
Section 2.6 Transfer of Mortgage Loans; Assign-
ment of Agreement ..................... 12
Section 2.7 Examination of Mortgage Files ......... 12
Section 2.8 Books and Records ..................... 12
Section 2.9 Cost of Delivery and Recordation of
Documents ............................. 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties as
to the Seller ........................ 13
Section 3.2 Representations and Warranties
Relating to the Mortgage Loans ....... 15
Section 3.3 Representations and Warranties of
the Purchaser ........................ 28
Section 3.4 Repurchase Obligation for Defective
Documentation and for Breach of a
Representation or Warranty .......... 29
ARTICLE IV
THE SELLER
Section 4.1 Covenants of the Seller .............. 33
Section 4.2 Merger or Consolidation .............. 33
i
Section 4.3 [RESERVED] ........................... 33
Section 4.4 Indemnification ...................... 33
ARTICLE V
CONDITIONS OF CLOSING
Section 5.1 Conditions of Purchaser's Obliga-
tions ................................ 35
Section 5.2 Conditions of Seller's Obligations .... 35
Section 5.3 Termination of Purchaser's Obliga-
tions ................................ 36
ARTICLE VI
MISCELLANEOUS
Section 6.1 Notices ............................... 37
Section 6.2 Severability of Provisions ........... 37
Section 6.3 Agreement of Seller ................... 37
Section 6.4 Survival ............................. 37
Section 6.5 Effect of Headings and Table of
Contents .............................. 38
Section 6.6 Successors and Assigns ................ 38
Section 6.7 Confirmation of Intent; Grant of
Security Interest ..................... 38
Section 6.8 Miscellaneous ......................... 39
Section 6.9 Amendments ........................... 39
Section 6.11 GOVERNING LAW; CONSENT TO JURISDIC-
TION; WAIVER OF JURY TRIAL ........... 39
Section 6.12 Execution in Counterparts ........... 39
Exhibits
Exhibit A - Mortgage Loan Schedule
Exhibit B - Officer's Certificate
ii
This Mortgage Loan Sale Agreement, dated as of December 6, 1995, by and
between IHE Funding Corp., a Delaware corporation, its successors and assigns
(the "Purchaser"), and Irwin Union Bank and Trust Company, an Indiana banking
corporation and its successors (the "Seller").
W I T N E S S E T H:
WHEREAS, Exhibit A attached hereto and made a part hereof lists
certain home equity loans secured by mortgages on one- to four-family
residential properties owned by the Seller that the Seller desires to sell to
the Purchaser and that the Purchaser desires to purchase;
WHEREAS, it is the intention of the Seller and the Purchaser
that simultaneously with the Seller's conveyance of the Mortgage Loans (as
defined herein) to the Purchaser on the Closing Date, (a) the Purchaser shall
sell the Mortgage Loans to Prudential Securities Secured Financing Corporation
(the "Depositor") pursuant to a Purchase and Sale Agreement of even date
herewith (the "Purchase and Sale Agreement"), (b) the Depositor shall deposit
the Mortgage Loans in a trust (the "Trust") pursuant to a Pooling and Servicing
Agreement to be dated as of December 6, 1995 (the "Pooling and Servicing
Agreement"), to be entered into by and among the Depositor, as depositor, Irwin
Home Equity Corporation, as servicer (in such capacity, the "Servicer") and The
Chase Manhattan Bank, N.A., as trustee (the "Trustee") and (c) the Trustee shall
issue certificates evidencing beneficial ownership interests in the property of
the trust fund formed by the Pooling and Servicing Agreement to the Depositor
and, at the request and pursuant to the directions of the Purchaser hereunder
and in recognition of the Seller's continuing obligation to fund the Additional
Balances (as defined herein) on the Mortgage Loans deposited in the Trust, shall
issue the Exchangeable Certificate (as defined herein), representing the
beneficial interest in such Additional Balances on such Mortgage Loans, to the
Seller;
WHEREAS, as a matter of convenience and in light of the ultimate
transfer of the Mortgage Notes and the Mortgage Loans securing the obligations
of each Mortgagor under the related Mortgage Notes into the Trust, the Seller
has caused the Mortgage Notes to be endorsed in a manner suitable for the
delivery to the Trustee and has caused the assignment of the Mortgage Loans to
be made directly to the Trustee, without providing or indicating on any
endorsement of the Mortgage Notes or assignment of the Mortgage Loans the
respective interim endorsees or interim assignees, it being understood that the
Trustee shall hold the Mortgage Notes as bailee for the Purchaser until the
Purchaser transfers the Mortgage Notes to the Depositor pursuant to the Purchase
and Sale Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used herein, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Capitalized terms used herein and not
otherwise defined shall have the respective meanings ascribed thereto in the
Pooling and Servicing Agreement.
"Additional Balance" shall mean any amounts added to the
principal balance of a Mortgage Loan after the Cut-Off Date as a result of the
Mortgagor on the related Mortgage Note exercising the right to borrow additional
amounts under such Mortgage Loan.
"Agreement" means this Mortgage Loan Sale Agreement, as amended
or supplemented in accordance with the provisions hereof.
"Closing Date" shall have the meaning ascribed thereto in
Section 2.1(c) hereof.
"Cut-Off Date Aggregate Principal Balance" means the aggregate
unpaid principal balance of the Mortgage Loans as of the Cut-Off Date. The Cut-
Off Date Aggregate Principal Balance is $51,583,721.78.
"Cut-Off Date Principal Balance" means as to each Mortgage Loan,
its unpaid Principal Balance as of the Cut-Off Date.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Index" means, as to any Mortgage Loan, a rate per annum equal
to the highest prime rate published in the "Money Rates" section of The Wall
Street Journal on the last Business Day in the applicable period, or as
otherwise determined in accordance with the related Mortgage Note.
"Interest Adjustment Date" means the date on which the Mortgage
Interest Rate is or may be adjusted with respect to each Mortgage Loan.
"Mortgage Interest Rate" means, as to any Mortgage Loan, the per
annum rate at which interest accrues on the unpaid Principal Balance thereof, as
adjusted from time to time in accordance with the provisions of the related
Mortgage Note, which rate is (a) prior to the first Interest Adjustment Date for
each such Mortgage Loan occurring after the Cut-Off Date, the initial Mortgage
Interest Rate for such Mortgage Loan indicated on the Mortgage Loan Schedule and
(b) from and after such first Interest Adjustment Date, the sum of the Index
applicable to the most recent Interest Adjustment Date, and the Gross Margin,
rounded as set forth in such Mortgage Note, subject to the Lifetime Cap and the
Lifetime Floor and any applicable statutory maximum interest rate as set forth
in the related Mortgage Note, that may be applicable to such Mortgage Loan at
any time during the life of such Mortgage Loan.
"Mortgage Loans" means (i) the home equity revolving credit line
loans identified on the Mortgage Loan Schedule on the Closing Date, (ii) any
additional such home equity revolving credit line loans identified on the
Mortgage Loan Schedule after the Closing Date, as such schedule is amended and
supplemented from time to time in accordance with the terms of the Pooling and
Servicing Agreement, (iii) each Mortgage Note evidencing any credit line loan
referred to in (i) or (ii) above, including all amounts now or hereafter due
under such Mortgage Notes whether relating to such credit line loans or other
loans which may be made from time to time and (iv) the related Mortgages; in
each case other than payments of interest that accrued on each Mortgage Loan up
to and including the Due Date immediately preceding the applicable cut-off date.
"Mortgage Loan Schedule" shall have the meaning ascribed thereto
in the Pooling and Servicing Agreement. The Mortgage Loan Schedule is attached
hereto as Exhibit A.
"Payment Adjustment" means, with respect to any Mortgage Loan
(i) the adjustment of the amount of the Monthly Payment due on the Mortgage Loan
which adjustment may result from the capitalizing of accrued and unpaid interest
on such Mortgage Loan in accordance with the amortization schedule at the time
applicable thereto and (ii) the adjustment of the Monthly Payment due on the
Mortgage Loan which adjustment may result from the conversion, after the first
ten years of the life of the Mortgage Loan, from a Monthly Payment representing
interest only, to a Monthly Payment such that the principal outstanding balance
of the Mortgage Loan will be fully amortized over the remaining life of such
Mortgage Loan.
"Payment Adjustment Date" means, with respect to a Mortgage Loan
the date on which a Payment Adjustment may occur.
"Pooling and Servicing Agreement" shall have the meaning
ascribed thereto in the recitals hereof.
"Prospectus" means the Prospectus dated August 4, 1995 relating
to the offering by the Depositor from time to time of its Pass-Through
Certificates (Issuable in Series) in the form in which it was or will be filed
with the Securities and Exchange Commission pursuant to Rule 424(b) under the
Securities Act with respect to the offer and sale of the Certificates.
"Purchase and Sale Agreement" shall have the meaning ascribed
thereto in the recitals hereof.
"Registration Statement" means that certain registration
statement on Form S-3, as amended (Registration No. 33-91148) relating to the
offering by the Depositor from time to time of its Pass-Through Certificates
(Issuable in Series) as heretofore declared effective by the Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means Irwin Union Bank and Trust Company, in its
capacity as Seller of the Mortgage Loans under this Agreement and any successor
to Irwin Union Bank and Trust Company, whether through merger, consolidation,
purchase and assumption of Irwin Union Bank and Trust Company or all or
substantially all of its assets or otherwise.
"Servicer" means Irwin Home Equity Corporation, in its capacity
as servicer of the Mortgage Loans and as the Servicer under the Pooling and
Servicing Agreement, or any successor appointed pursuant to the Pooling and
Servicing Agreement.
"Termination Event" means the existence of any one or more of
the following conditions:
(a) a stop order suspending the effectiveness of the Registration
Statement shall have been issued or a proceeding for that purpose shall have
been initiated or threatened by the Commission; or
(b) subsequent to the execution and delivery of this Agreement, a
downgrading, or public notification of a possible change, without indication of
direction, shall have occurred in the rating afforded any of the debt securities
or claims paying ability of any person providing any form of credit enhancement
for any of the Certificates, by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Securities Act; or
(c) subsequent to the execution and delivery of this Agreement,
there shall have occurred an adverse change in the condition, financial or
otherwise, earnings, affairs, regulatory situation or business prospects of the
Certificate Insurer or the Seller reasonably determined by the Purchaser or the
Depositor to be material; or
(d) subsequent to the date of this Agreement there shall have
occurred any of the following: (i) a suspension or material limitation in
trading in securities substantially similar to the Certificates; (ii) a general
moratorium on commercial banking activities in New York declared by either
Federal or New York State authorities; or (iii) the engagement by the United
States in hostilities, or the escalation of such hostilities, or any calamity or
crisis, if the effect of any such event specified in this clause (iii) in the
reasonable judgment of the Depositor makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Certificates on the
terms and in the manner contemplated in the Prospectus Supplement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
ARTICLE II
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS
Section 2.1 Agreement to Purchase. (a) Subject to the
terms and conditions of this Agreement, the Seller hereby sells, transfers,
conveys, and assigns and the Purchaser hereby purchases the Mortgage Loans, it
being understood by the parties hereto that the Seller is transferring all
rights with respect to each Mortgage Loan but retains, has reserved and is not
transferring hereby, the obligation to fund any Additional Balance on each such
Mortgage Loan.
(b) Subject to Section 2.7, the Purchaser and the Seller
have agreed upon which of the Seller's Mortgage Loans are purchased by the
Purchaser pursuant to this Agreement, and the Seller has prepared a Mortgage
Loan Schedule. The Mortgage Loan Schedule is attached hereto as Exhibit A. The
Mortgage Loan Schedule shall be amended from time to time to reflect the
addition or removal of any Additional Balances on the Mortgage Loans, or in
connection with the issuance of any certificates.
(c) The closing for the purchase and sale of the Mortgage
Loans shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom,
New York, New York, at 10:00 a.m., New York time, on December 6, 1995 or such
other place and time as the parties shall agree (such time being herein referred
to as the "Closing Date").
Section 2.2 Purchase Price. On the Closing Date, as full
consideration for the Seller's sale of the Mortgage Loans to the Purchaser, the
Purchaser will deliver to the Seller an amount in cash equal to $54,162,907.98,
payable in immediately available funds. In recognition of the Seller's
continuing obligation to fund the Additional Balances drawn by the Mortgagor
under the related Mortgage Loan, the Purchaser shall, pursuant to the Purchase
and Sale Agreement and the Pooling and Servicing Agreement, cause the Depositor
to direct the Trustee to issue the Exchangeable Certificate, representing the
right to receive payments allocable to the Additional Balances, to the Seller.
Section 2.3 Conveyance of Mortgage Loans; Possession of
Mortgage Files. (a) Effective as of the Closing Date, the Seller hereby sells,
transfers, assigns, sets over and conveys to the Purchaser, without recourse but
subject to the terms of this Agreement, all right, title and interest in and to
the Mortgage Loans, the insurance policies relating to each such Mortgage Loan,
if any, and all right, title and interest in and to the proceeds of such
insurance policies from and after the Closing Date.
(b) Upon the sale of such Mortgage Loans, the ownership of
each related Mortgage Note, each related Mortgage and the contents of the
related Mortgage File shall immediately vest in the Purchaser and the ownership
of all related records and documents with respect to each Mortgage Loan prepared
by or which come into the possession of the Seller shall immediately vest in the
Purchaser. The contents of any Mortgage File in the possession of the Seller at
any time after such sale, and any scheduled payments of principal and interest
on the Mortgage Loans due after the Cut-Off Date and received by the Seller
(excluding interest accruing on or prior to the Due Date immediately preceding
the Cut-Off Date, which shall be retained by the Seller), shall be held in trust
by the Seller for the benefit of the Purchaser as the owner thereof, and shall
be promptly delivered by the Seller to or upon the order of the Purchaser.
(c) Pursuant to the Purchase and Sale Agreement, the
Purchaser shall, on the Closing Date, irrevocably sell, transfer, setover,
convey and assign all of its right, title and interest in and to the Mortgage
Loans to the Depositor.
(d) Pursuant to the Pooling and Servicing Agreement, the
Depositor shall, on the Closing Date, irrevocably transfer, assign, set over and
otherwise convey all of its right, title and interest in and to the applicable
Mortgage Loans and all of its rights (exclusive of its obligations) under the
Purchase and Sale Agreement and this Agreement to the Trustee for the benefit of
the Certificateholders, the holder of the Exchangeable Certificate and of any
Additional Certificate and the Certificate Insurer.
Section 2.4 Delivery of Mortgage Loan Documents. (a) On or
prior to the Closing Date, the Seller shall deliver to the Trustee each of the
following documents for each applicable Mortgage Loan:
(i) The original Mortgage Note, endorsed by the holder of
record without recourse in the following form: "Pay to the order of
, without recourse" and signed in the name of the holder of record, and if by
the Seller, by an authorized officer;
(ii) The original Mortgage with evidence of recording
indicated thereon; provided, that if such Mortgage has not been returned from
the applicable recording office, then such recorded Mortgage shall be delivered
when so returned;
(iii) An assignment of the original Mortgage, in suitable form
for recordation in the jurisdiction in which the related Mortgaged Property is
located, in the name of the holder of record of the Mortgage Loan by an
authorized officer (with evidence of submission for recordation of such
assignment in the appropriate real estate recording office for such Mortgaged
Property to be received by the Trustee within 14 days of the Closing Date);
provided, however, that assignments of mortgages shall not be required to be
submitted for recording with respect to any Mortgage Loan if the Seller shall
have delivered no later than 14 days after the Closing Date an opinion of
counsel in form and substance satisfactory to the Purchaser, the Depositor, the
Trustee, each of the Rating Agencies and the Certificate Insurer stating that,
in such counsel's opinion, the failure to record such assignment shall not have
a materially adverse effect on the security interest of the Purchaser, the
Depositor or the Trustee in the Mortgage; provided, further, that any assignment
not submitted for recordation within 14 days of the Closing Date shall be
recorded upon the earlier to occur of (i) receipt by the Trustee of the
Certificate Insurer's written direction to record such Mortgage, (ii) the
occurrence of any Event of Default, as such term is defined in the Pooling and
Servicing Agreement, or (iii) a bankruptcy or insolvency proceeding involving
the Mortgagor is initiated or foreclosure proceedings are initiated against the
Mortgaged Property as a consequence of an event of default under the Mortgage
Loan; provided, further, that if the related Mortgage has not been returned
from the applicable recording office, then such assignment shall be delivered
when so returned (and a blanket assignment with respect to such unrecorded
Mortgage Loan shall be delivered on the Closing Date);
(iv) Any intervening assignments of the Mortgage with
evidence of recording thereon;
(v) Any assumption, modification, consolidation or extension
agreements; and
(vi) The policy of title insurance (or a commitment for title
insurance, if the policy is being held by the title insurance company pending
recordation of the Mortgage) and the certificate of primary mortgage guaranty
insurance, if any, issued with respect to such Mortgage Loan, provided, however,
that Mortgage Loans with a principal balance under $15,000 as of the Cut-Off
Date which are in a second lien position and have been submitted for review of
title after July 10, 1995 shall be exempt from this requirement.
(b) In the event that any such Assignment of Mortgage
referred to in clause (a)(iii) above is not in a suitable form for recording or
is lost or, upon an attempt to record such Assignment of Mortgage, is returned
unrecorded because of a defect therein, the Seller shall promptly prepare a
substitute Assignment of Mortgage or cure such defect, as the case may be.
(c) The Seller shall, within five Business Days after the
receipt thereof, and in any event, no later than 120 days after the Closing
Date, deliver or cause to be delivered to the Trustee or its designee: (i) the
original recorded Mortgage and related power of attorney, if any, in those
instances where a copy thereof certified by the Seller was delivered to the
Purchaser; (ii) the original Assignment of Mortgage from the Seller to the
Purchaser (or at the direction of the Purchaser, to the Trustee) delivered
pursuant to the foregoing clause (a)(iii) above, which, together with any
intervening assignments of Mortgage, evidences a complete chain of assignment
from the originator of the Mortgage Loan to the Trustee in those instances where
copies of such Assignments certified by the Seller were delivered to the
Trustee; and (iii) the title insurance policy or title opinion required in
clause (a)(vi) above. Notwithstanding anything to the contrary contained in
this Section 2.4, in those instances where the public recording office retains
the original Mortgage, power of attorney, if any, assignment or Assignment of
Mortgage after it has been recorded or such original has been returned by the
recording office but has not yet arrived at the Seller, or it has been lost by
the recording office, the Seller shall be deemed to have satisfied its
obligations hereunder upon delivery to the Purchaser of a copy of such Mortgage,
power of attorney, if any, assignment or Assignment of Mortgage certified by the
public recording office to be a true copy of the recorded original thereof. From
time to time the Seller may forward or cause to be forwarded to the Purchaser
additional original documents evidencing an assumption or modification of a
Mortgage Loan.
(d) All original documents relating to the Mortgage Loans
that are not delivered to the Purchaser as permitted by this Section 2.4 are and
shall be held by the Seller in trust for the benefit of the Purchaser or its
assignee, or the assignees of its assignee. In the event that any such original
document is required pursuant to the terms of this Section 2.4 to be a part of a
Mortgage File, such document shall be delivered promptly to, or upon the
instruction of, the Purchaser. From and after the sale of the Mortgage Loans to
the Purchaser pursuant hereto, to the extent that the Seller retains legal title
of record to any Mortgage Loans prior to the vesting of legal title in the
Purchaser, and, pursuant to the Purchase and Sale Agreement, thereafter in the
Trustee (as assignee of the Depositor pursuant to the Pooling and Servicing
Agreement), such title shall be retained in trust for the Purchaser, on behalf
of and for the benefit of the Depositor as the owner of the Mortgage Loans and
the Trustee, as the Depositor's assignee.
Section 2.5 Acceptance of Mortgage Loans. (a) Pursuant to
the Pooling and Servicing Agreement, the Trustee has agreed to execute and
deliver on or prior to the Closing Date an acknowledgment of receipt of, for
each Mortgage Loan, the original Mortgage Note with respect to each Mortgage
Loan (with any exceptions noted), in the form attached as Exhibit E to the
Pooling and Servicing Agreement and declares that it will hold such documents
and any amendments, replacements or supplements thereto, as well as any other
assets included in the definition of Trust Fund in the Pooling and Servicing
Agreement and delivered to the Trustee, as Trustee in trust upon and subject to
the conditions set forth in the Pooling and Servicing Agreement for the benefit
of the Certificateholders and the Certificate Insurer. Pursuant to the Pooling
and Servicing Agreement, the Trustee has agreed, for the benefit of the
Certificateholders and the Certificate Insurer, to review (or cause to be
reviewed) each Trustee's Mortgage File within 45 Business Days after the Closing
Date (or, with respect to any Qualified Substitute Mortgage Loan, within 45
Business Days after the receipt by the Trustee thereof) and to deliver to the
initial Certificateholders, the Purchaser, the Servicer and the Certificate
Insurer a certification in the form attached to the Pooling and Servicing
Agreement as Exhibit F to the effect that, as to each Mortgage Loan listed in
the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in such certification as not covered by
such certification), (i) all documents required to be delivered to it hereunder,
pursuant to the Purchase and Sale Agreement and pursuant to the Pooling and
Servicing Agreement are in its possession, and (ii) each such document has been
reviewed by it, has been executed to the extent required, and has not been
mutilated, damaged, torn or otherwise physically altered (handwritten additions,
changes or corrections shall not constitute physical alteration if initialled by
the Mortgagor), appears regular on its face and relates to such Mortgage Loan.
The Pooling and Servicing Agreement provides that the Trustee shall be under no
duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face. The Pooling and Servicing Agreement
also provides that, by December 6, 1996, the Trustee shall be required to
deliver (or cause to be delivered) to the Servicer, the Purchaser, the initial
Certificateholders and the Certificate Insurer a final certification in the form
attached to the Pooling and Servicing Agreement as Exhibit G to the effect that,
as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in such
certification as not covered by such certification), and as to any document
noted in an exception included in the Trustee's initial certification, (i) all
documents required to be delivered to it hereunder and in the Purchase and Sale
Agreement and pursuant to the Pooling and Servicing Agreement are in its
possession, and (ii) each such document has been reviewed by it, has been
executed to the extent required, and has not been mutilated, damaged, torn or
otherwise physically altered (handwritten additions, changes or corrections
shall not constitute physical alteration if initialled by the Mortgagor),
appears regular on its face and relates to such Mortgage Loan.
(b) The Pooling and Servicing Agreement also provides that,
if the Certificate Insurer or the Trustee during the process of reviewing the
Trustee's Mortgage Files finds any document constituting a part of a Trustee's
Mortgage File which is not executed, has not been received, is unrelated to the
Mortgage Loan identified in the Mortgage Loan Schedule, or does not conform to
the requirements of Section 2.4 or the description thereof as set forth in the
Mortgage Loan Schedule, the Trustee or the Certificate Insurer, as applicable,
shall promptly so notify the Servicer or the Purchaser, who shall notify the
Seller. The Seller agrees that in performing any such review, the Trustee may
conclusively rely on the Seller as to the purported genuineness of any such
document and any signature thereon. The Seller agrees to use reasonable efforts
to remedy a material defect in a document constituting part of a Mortgage File
of which it is notified. If, however, within 60 days after such notice the
Seller has not remedied the defect and the defect materially and adversely
affects the interest of the Purchaser in the related Mortgage Loan, then the
Seller shall either substitute in lieu of such Mortgage Loan a Qualified
Substitute Mortgage Loan or purchase such Mortgage Loan in the manner and
subject to the conditions set forth in Section 3.4.
(c) The failure of the Purchaser to give any notice
contemplated herein within the time periods specified above shall not affect or
relieve the Seller's obligation to repurchase for any Mortgage Loan pursuant to
this Section 2.5 or Section 3.4 of this Agreement.
(d) In the event that any Mortgage Note required to be
delivered pursuant to Section 2.4 is conclusively determined by any of the
Seller, the Servicer, the Custodian or the Trustee to be lost, stolen or
destroyed, the Seller shall, within 14 days of the Closing Date, deliver to the
Trustee a "lost note affidavit" in form and substance acceptable to the Trustee,
and shall simultaneously therewith request the obligor on such Mortgage Note to
execute and return a replacement Mortgage Note, and shall further agree to hold
the Purchaser, the Depositor, the Trustee and the Certificate Insurer harmless
from any loss or damage resulting from any action taken in reliance on the
delivery and possession by the Trustee of such lost note affidavit. Upon the
receipt of such replacement Mortgage Note, the Trustee shall return the lost
note affidavit and the Servicer shall have no further indemnification obligation
with respect to such lost note affidavit. The delivery of such lost note
affidavit shall not affect the obligations of the Seller pursuant to this
Section 2.5 or Section 3.4 of this Agreement.
Section 2.6 Transfer of Mortgage Loans; Assignment of
Agreement. The Seller hereby acknowledges and agrees that the Purchaser may
sell, transfer and assign its interest under this Agreement to the Depositor,
who in accordance with the Pooling and Servicing Agreement may assign its
interest to the Trustee as may be required to effect the purposes of the Pooling
and Servicing Agreement, without further notice to, or consent of, the Purchaser
or Seller, and the Trustee shall succeed to such of the rights and obligations
of the Depositor as shall be so assigned.
Section 2.7 Examination of Mortgage Files. Prior to the
Closing Date, the Seller shall make the Mortgage Files available to the
Purchaser or its designee for examination at the Seller's offices or at such
other place as the Seller shall reasonably specify. Such examination may be
made by the Purchaser or its designee at any time on or before the Closing Date.
If the Purchaser or its designee makes such examination prior to the Closing
Date and identifies any Mortgage Loans that do not conform to the requirements
of the Purchaser as described in this Agreement, such Mortgage Loans shall be
deleted from the Mortgage Loan Schedule and may be replaced, prior to the
Closing Date, by substitute Mortgage Loans acceptable to the Purchaser. The
Purchaser may, at its option and without notice to the Seller, purchase all or
part of the Mortgage Loans without conducting any partial or complete
examination.
Section 2.8 Books and Records. The sale of each Mortgage
Loan shall be reflected on the Seller's accounting and other records, balance
sheet and other financial statements as a sale of assets by the Seller to the
Purchaser.
Section 2.9 Cost of Delivery and Recordation of Documents.
The costs relating to the delivery and recordation of the documents specified in
this Article II in connection with the Mortgage Loans shall be borne by the
Purchaser.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties as to the Seller.
The Seller hereby represents and warrants to the Purchaser, as of the Closing
Date, that:
(a) The Seller is an Indiana banking corporation duly
organized and validly existing under the banking laws of the State of Indiana
and has all licenses necessary to carry on its business as now being conducted
and is licensed, qualified and in good standing in each state where a Mortgaged
Property is located and is duly licensed and qualified in each such state that
requires licensing or qualification in order to conduct business of the type
conducted by the Seller and to perform its obligations as the Seller hereunder,
and in any event the Seller is in compliance with the laws of any such state to
the extent necessary to ensure the enforceability of the related Mortgage Loan;
the Seller has the full power and authority, corporate and otherwise, to execute
and deliver this Agreement and to perform in accordance herewith; the execution,
delivery and performance of this Agreement (including all instruments of
transfer to be delivered pursuant to this Agreement) by the Seller and the
consummation of the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and enforceable
obligation of the Seller; and all requisite corporate action has been taken by
the Seller to make this Agreement valid and binding upon the Seller in
accordance with its terms;
(b) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery and
performance by the Seller of or compliance by the Seller with this Agreement or
the sale of the Mortgage Loans pursuant to the terms of this Agreement or the
consummation of the transactions contemplated by this Agreement, or if required,
such approval has been obtained prior to the Closing Date;
(c) Neither the execution and delivery of this Agreement,
the acquisition or origination of the Mortgage Loans by the Seller or the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, has or will conflict with or result in a
breach of any of the terms, conditions or provisions of the Seller's charter or
by-laws or any legal restriction or any agreement or instrument to which the
Seller is now a party or by which it is bound or to which its property is
subject, or constitute a default or result in an acceleration under any of the
foregoing, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Seller or its property is subject, or impair the
ability of the Purchaser to realize on the Mortgage Loans, or impair the value
of the Mortgage Loans;
(d) Neither this Agreement nor the information contained in
the Prospectus Supplement under the caption "Description of the Mortgage Loans
- -- Underwriting Criteria," "-- Origination Process" or "-- Mortgage Loan Closing
Procedures" nor any statement, report or other document prepared by the Seller
and furnished or to be furnished pursuant to this Agreement or in connection
with the transactions contemplated hereby contains any untrue statement or
alleged untrue statement of any 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 they were made, not misleading;
(e) There is no action, suit, proceeding or investigation
pending or, to the knowledge of the Seller, threatened before a court,
administrative agency or government tribunal against the Seller which, either in
any one instance or in the aggregate, may result in any material adverse change
in the business, operations, financial condition, properties or assets of the
Seller, or in any material impairment of the right or ability of the Seller to
carry on its business substantially as now conducted, or in any material
liability on the part of the Seller, or which would draw into question the
validity of this Agreement, the Mortgage Loans, or of any action taken or to be
taken in connection with the obligations of the Seller contemplated herein, or
which would materially impair the ability of the Seller to perform under the
terms of this Agreement or that might prohibit its entering into this Agreement
or the consummation of any of the transactions contemplated hereby;
(f) The Seller is not in violation of or in default with
respect to, and the execution and delivery of this Agreement by the Seller and
its performance of and compliance with the terms hereof will not constitute a
violation or default with respect to, any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or governmental
agency, which violation or default might have consequences that would materially
and adversely affect the condition (financial or other) or operations of the
Seller or its properties or might have consequences that would materially and
adversely affect its performance hereunder or under any subservicing agreement;
(g) Upon the receipt of each Mortgage File by the Purchaser
under this Agreement, the Purchaser will have good title to each related
Mortgage Loan free and clear of any lien created by the Seller (other than liens
which will be simultaneously released);
(h) The consummation of the transactions contemplated by
this Agreement are in the ordinary course of business of the Seller, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
the Seller pursuant to this Agreement are not subject to the bulk transfer or
any similar statutory provisions or any federal or state regulations applicable
to a banking corporation in effect in any applicable jurisdiction;
(i) With respect to any Mortgage Loan purchased by the
Seller, the Seller acquired title to the Mortgage Loan in good faith, without
notice of any adverse claim not otherwise disclosed to the Purchaser;
(j) The Seller does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant contained in
this Agreement. The Seller is solvent and the sale of the Mortgage Loans by the
Seller pursuant to the terms of this Agreement will not cause the Seller to
become insolvent. The sale of the Mortgage Loans by the Seller pursuant to the
terms of this Agreement was not undertaken with the intent to hinder, delay or
defraud any of the Seller's creditors;
(k) The Mortgage Loans are not intentionally selected by the
Seller for sale to the Purchaser in a manner so as to affect adversely the
interests of the Purchaser or of any transferee of the Purchaser (including the
Depositor or the Trustee);
(l) [Reserved]
(m) The Seller has not dealt with any broker or agent or
anyone else that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans to the Depositor other than to the Depositor
or an affiliate thereof; and
(n) The consideration received by the Seller upon the sale
of the Mortgage Loans under this Agreement constitutes fair consideration and
reasonably equivalent value for the Mortgage Loans.
Section 3.2 Representations and Warranties Relating to the
Mortgage Loans. The Seller represents and warrants to the Purchaser as of the
Closing Date that, as to each Mortgage Loan, immediately prior to the sale and
transfer of such Mortgage Loan by the Seller to the Purchaser:
(a) The Mortgage Loans had, as of the Cut-Off Date, an
aggregate Principal Balance equal to $51,583,721.78, and all of the information
set forth in the Mortgage Loan Schedule is complete, true and correct;
(b) All payments required to be made up to the Cut-Off Date
for the Mortgage Loan under the terms of the Mortgage Note have been made and
credited. Unless otherwise specified on the Mortgage Loan Schedule, no payment
required under the Mortgage Loan is more than 30 days delinquent nor has any
payment under the Mortgage Loan been delinquent for more than 30 days more than
once in the 12 months preceding the Cut-Off Date; and the first Monthly Payment
has been made or shall be made, as the case may be, with respect to the Mortgage
Loan on the Due Date or within the grace period;
(c) To the best of Seller's knowledge, there are no defaults
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,
or an escrow of funds has been established in an amount sufficient to pay for
every such item which remains unpaid and which has been assessed but is not yet
due and payable. The Seller has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the Mortgagor,
directly or indirectly, for the payment of any amount required under the
Mortgage Loan;
(d) The terms of the Mortgage Note and Mortgage have not
been impaired, waived, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary to protect the interests of the
Purchaser, and delivered to the Purchaser. The substance of any such waiver,
alteration or modification has been approved by the title insurer, to the extent
required by the policy, and its terms are reflected on the Mortgage Loan
Schedule. No Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement approved by the title insurer, to the
extent required by the policy, and which assumption agreement is part of the
Mortgage File delivered to the Purchaser and the terms of which are reflected in
the Mortgage Loan Schedule;
(e) The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including, without limitation, 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, recoupment, counterclaim or defense,
including, without limitation, the defense of usury, and no such right of
rescission, set-off, recoupment, counterclaim or defense has been asserted with
respect thereto, and no Mortgagor was a debtor in any state or federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated;
(f) Pursuant to the terms of the Mortgage, the Mortgaged
Property is subject to fire and casualty insurance with a standard mortgagee
clause and extended coverage in an amount which is not less than the replacement
value of the improvements securing such Mortgage Loan. The fire and casualty
insurance is standard for the industry for property similar (in terms of
property type, value and location) to the Mortgaged Property. If, the Mortgaged
Property is in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, a flood insurance
policy is in effect with respect to the Mortgaged Property meeting the
requirements of the current guidelines of the Federal Insurance Administration
with a generally acceptable insurance carrier, in an amount representing
coverage not less than the least of (i) the unpaid principal balance of the
Mortgage Loan, (ii) the full insurable value of the Mortgaged Property or (iii)
the maximum amount of insurance available under the Flood Disaster Protection
Act of 1973. To the best of Seller's knowledge, all such insurance policies
(collectively, the "hazard insurance policy") meet the requirements of the
current guidelines of the Federal Insurance Administration, conform to the
requirements of the FNMA Sellers' Guide and the FNMA Servicers' Guide, and are a
standard policy of insurance for the locale where the Mortgaged Property is
located. It is understood and agreed that such insurance is with insurers
approved by the Servicer and that no earthquake or other additional insurance is
to be required of any Mortgagor or to be maintained on property acquired in
respect of a defaulted loan, other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. The hazard insurance policy names (and will name) the
Mortgagor as the insured and contains a standard mortgagee loss payable clause
in favor of the Seller, and its successors and assigns. The Seller has caused
and will cause to be performed any and all acts required to be performed to
preserve the rights and remedies of the Trustee in any hazard insurance policies
applicable to the Mortgage Loans including, without limitation, any necessary
notifications of insurers and assignments of policies or interests thereon. The
Mortgage obligates the Mortgagor thereunder to maintain the hazard insurance
policy at the Mortgagor's cost and expense, and on the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to obtain and maintain such insurance
at such Mortgagor's cost and expense, and to seek reimbursement therefor from
the Mortgagor; provided, however, that the addition of any such cost shall not
be taken into account for purposes of calculating the principal amount of the
Mortgage Note or the Mortgage Loan secured by the Mortgage Note. Where required
by state law or regulation, the Mortgagor has been given an opportunity to
choose the carrier of the required hazard insurance, provided the policy is not
a "master" or "blanket" hazard insurance policy covering a condominium or the
common facilities of a planned unit development. To the best of Seller's
knowledge, the hazard insurance policy is the valid and binding obligation of
the insurer, is in full force and effect, and will be in full force and effect
and inure to the benefit of the Purchaser upon the consummation of the
transactions contemplated by this Agreement. The Seller has not engaged in, and
has no knowledge of the Mortgagor's or any subservicer's having engaged in, any
act or omission which would impair the coverage of any such policy, the benefits
of the endorsement provided for herein, or the validity and binding effect of
either. To the best of Seller's knowledge, and in connection with the issuance
of the hazard insurance policy, no unlawful fee, commission, kickback or other
unlawful compensation or value of any kind has been or will be received,
retained or realized by any attorney, firm or other person or entity, and no
such unlawful items have been received, retained or realized by the Seller;
(g) 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 the
consummation of the transactions contemplated hereby will not involve the
violation of any such laws;
(h) The Mortgage has not been satisfied, canceled,
subordinated (other than in connection with a refinancing of the first mortgage
on the Mortgaged Property) or rescinded, in whole or in part, and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole or in
part, nor has any instrument been executed that would effect any such release,
cancellation, subordination or rescission. The Seller has not waived the
performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has the
Seller waived any default resulting from any action or inaction by the
Mortgagor;
(i) The Mortgaged Property is located in the state
identified in the Mortgage Loan Schedule and consists either of a fee simple
estate or, in the case of certain Mortgage Loans secured by Mortgaged Property
located in the State of Illinois, a land trust, in a single parcel of real
property improved by a one- to four-family residential dwelling or a
manufactured dwelling (non-mobile, as defined in the FNMA Selling Guide);
(j) The Mortgage is a valid, subsisting, enforceable and
perfected first or second lien on the Mortgaged Property, including all
buildings on the Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems located in or annexed
to such buildings, and all additions, alterations and replacements made at any
time with respect to the foregoing. The lien of the Mortgage is subject only
to:
(i) in the case of Mortgage Loans in a second
priority lien position, a first mortgage;
(ii) the lien of current real property taxes and
assessments not yet due and payable;
(iii) covenants, conditions and restrictions, rights
of way, easements and other matters of the public record as of the date of
recording acceptable to prudent mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy delivered to the
originator of the Mortgage Loan and referred to or otherwise considered in the
appraisal made for the originator of the Mortgage Loan; and
(iv) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
Except for those Mortgage Loans subject to a first mortgage lien, any security
agreement, chattel mortgage or equivalent document related to and delivered in
connection with the Mortgage Loan establishes and creates a valid, subsisting
and enforceable first lien and first priority security interest on the property
described therein and immediately prior to the sale of such Mortgage Loan to the
Purchaser pursuant to this Agreement, the Seller had full right to sell and
assign the same to the Purchaser. As of the date of origination of the Mortgage
Loan, the Mortgaged Property was not subject to a mortgage, deed of trust, deed
to secure debt or other security instrument creating a lien subordinate to the
lien of the Mortgage;
(k) The Mortgage Note and the Mortgage and every other
agreement, if any, executed and delivered by the Mortgagor in connection with
the Mortgage Loan are genuine, and each is the legal, valid and binding
obligation of the maker thereof enforceable in accordance with its terms. All
parties to the Mortgage Note and the Mortgage and any other related agreement
had legal capacity to enter into the Mortgage Loan and to execute and deliver
the Mortgage Note, the Mortgage and such other related agreements, and the
Mortgage Note and the Mortgage and such other related agreements have been duly
and properly executed by such parties. The Seller has reviewed, or has caused
to be reviewed, all of the documents constituting the Mortgage File and has made
such inquiries as it deems necessary to make and confirm the accuracy of the
representations set forth herein;
(l) The Mortgage Loan has been closed and any proceeds of
the Mortgage Loan drawn by the Mortgagor as of the Cut-Off Date have been fully
disbursed and there is no requirement for future advances thereunder (except
that the Mortgagor has the right to make additional drawings thereunder), and
any and all requirements as to completion of any on-site or off-site improvement
and as to disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making or closing the Mortgage Loan and
the recording of the Mortgage were paid, and the Mortgagor is not entitled to
any refund of any amounts paid or due under the Mortgage Note or Mortgage;
(m) Immediately prior to the sale of the Mortgage Loan to
the Purchaser under this Agreement, (i) the Seller was the sole owner of record
and holder of the Mortgage Loan, (ii) the Mortgage Loan was not assigned or
pledged, (iii) the Seller had good, indefeasible and marketable title thereto,
(iv) the Seller had full right to transfer and sell the Mortgage Loan therein to
the Purchaser free and clear of any encumbrance, equity interest, participation
interest, lien, pledge, charge, claim or security interest, and (v) the Seller
had full right and authority subject to no interest or participation of, or
agreement with, any other party, to sell and assign each Mortgage Loan to the
Purchaser under this Agreement, and following the sale of each Mortgage Loan,
the Purchaser will own such Mortgage Loan free and clear of any encumbrance,
equity interest, participation interest, lien, pledge, charge, claim or security
interest;
(n) All parties which had any interest in the Mortgage Loan,
whether as mortgagee, assignee, pledgee or otherwise, and including, without
limitation, the Seller, to the best knowledge of the Seller, are (or, during the
period in which they held and disposed of such interest, were) (i) in compliance
with any and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located to the extent required to avoid a
material adverse effect to the interest of the Purchaser, (ii) (1) organized
under the laws of such state, or (2) qualified to do business in such state, or
(3) federal savings and loan associations, savings banks, or national banks
having principal offices in such state, or (4) not doing business in such state;
(o) The Mortgage Loan has an original Loan-to-Value ratio
(calculated at the time of origination by dividing the outstanding principal
amount of the Mortgage Loan by the appraised value of the Mortgaged Property)
equal to or less than [100%];
(p) Each Mortgage Loan (x) in a first lien position or (y)
having a principal balance of $15,000 or more and which has not been submitted
for a review of title after July 10, 1995, is covered by either (i) an
attorney's opinion of title and abstract of title or (ii) an ALTA lender's title
insurance policy or other generally acceptable form of policy of insurance
issued by a title insurer qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the Seller, its successors and assigns,
as to the priority of its lien of the Mortgage in the original principal amount
of the Mortgage Loan, and subject only to the exceptions contained in clauses
(i), (ii), (iii) and (iv) of paragraph (j) above and against any loss by reason
of the invalidity or unenforceability of the lien resulting from the provisions
of the Mortgage. Where required by state law or regulation, the Mortgagor has
been given the opportunity to choose the carrier of the required mortgage title
insurance. Additionally, such lender's title insurance policy affirmatively
insures ingress and egress, and against encroachments by or upon the Mortgaged
Property or any interest therein. Immediately prior to the sale of the Mortgage
Loan to the Purchaser under the terms of this Agreement, the Seller, its
successors and assigns were the sole insureds of such lender's title insurance
policy. Such lender's title insurance policy is in full force and effect and
will be in force and effect upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such lender's
title insurance policy, and no prior holder of the Mortgage, including the
Seller, has done, by act or omission, anything which would impair the coverage
of such lender's title insurance policy. In connection with the issuance of
such lender's title insurance policy, no unlawful fee, commission, kickback or
other unlawful compensation or value of any kind has been or will be received,
retained or realized by any attorney, firm or other person or entity, and no
such unlawful items have been received, retained or realized by the Seller;
(q) To the best of Seller's knowledge, after reasonable due
diligence, there is no default, breach, violation or event of acceleration
existing under the Mortgage or the 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 the Seller nor its predecessors have waived any default, breach,
violation or event of acceleration;
(r) To the best of the Seller'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 the law could give rise to
such liens) affecting the related Mortgaged Property which are or may be liens
prior to, or equal or coordinate with, the lien of the related Mortgage;
(s) To the best of Seller's knowledge, all improvements
which were considered in determining the Appraised Value of the Mortgaged
Property lay wholly within the boundaries and building restriction lines of the
Mortgaged Property and no improvements on adjoining properties encroach upon the
Mortgaged Property. To the best of Seller's knowledge, no improvement located
on or being part of the Mortgaged Property is in violation of any applicable
zoning law or regulation; provided, that in no event shall a legal nonconforming
use of the Mortgaged Property be considered a violation of any such zoning law
or regulation;
(t) The Mortgage Note is payable on the fifteenth day of
each month. The Mortgage Interest Rate and Monthly Payment are adjusted in
accordance with the terms of the Mortgage Note. All required notices of
interest rate and payment amount adjustments have been sent to the Mortgagor on
a timely basis and the computations of such adjustments were properly
calculated. Installments of interest are subject to change due to the
adjustments to the Mortgage Interest Rate on each Interest Adjustment Date, with
interest calculated and payable in arrears, sufficient to amortize the Mortgage
Loan fully by the stated maturity date over an original term of twenty years
from the closing date of the Mortgage Loan, however, the first ten years of
payments on the Mortgage Loan are not required to include principal payments but
are required to include at least the current interest due, calculated in
accordance with the applicable Mortgage Interest Rate. With respect to each
Mortgage Loan, the Payment Adjustments will be such that such Mortgage Loan will
fully amortize over twenty years notwithstanding any additions to the principal
balance of the Mortgage Loan due to capitalizing interest. All Mortgage
Interest Rate adjustments and Payment Adjustments have been made in strict
compliance with state and federal law and the terms of the related Mortgage
Note. Any interest required to be paid pursuant to state and local law has been
properly paid and credited;
(u) The Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the benefits of
the security provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise by judicial
foreclosure. Upon default by a Mortgagor on a Mortgage Loan and foreclosure on,
or trustee's sale of, the Mortgaged Property pursuant to the proper procedures,
the holder of the Mortgage Loan will be able to deliver good and merchantable
title to the Mortgaged Property. 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
subject to applicable federal and state laws and judicial precedent with respect
to bankruptcy and right of redemption;
(v) To the best of Seller's knowledge, all inspections,
licenses and certificates required to be made are issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including, but not limited to, certificates of occupancy
and fire underwriting certificates, have been made or obtained from the
appropriate authorities;
(w) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage referred to in
(j) above;
(x) In the event the Mortgage constitutes a deed of trust, a
trustee, authorized and duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the Trustee out
of the assets of the Trust Fund to the trustee under the deed of trust, except
in connection with a trustee's sale after default by the Mortgagor, provided
that this representation and warranty shall in no way obligate the Trustee to
pay any such amounts;
(y) The Mortgage Note, the Mortgage, the related Assignment
of Mortgage and any other documents required to be delivered by the Seller have
been delivered to the Trustee in accordance with Section 2.4 and with Section
2.5(d). The Trustee is in possession of a complete, true and accurate Mortgage
File in accordance with Section 2.3;
(z) The Mortgage contains a provision for the acceleration
of the payment of the unpaid principal balance of the Mortgage Loan in the event
that the Mortgaged Property is sold or transferred without the prior written
consent of the Mortgagee thereunder, at the option of the Mortgagee;
(aa) Each of the Mortgage and the Assignment of Mortgage is
in recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located;
(ab) The Mortgage Loan does not contain provisions pursuant
to which Monthly Payments are paid or partially paid with funds deposited in any
separate account established by the Seller, the Mortgagor or anyone on behalf of
the Mortgagor, or paid by any source other than the Mortgagor, nor does it
contain any other similar provisions currently in effect which may constitute a
"buydown" provision. The Mortgage Loan is not a graduated payment mortgage loan
and the Mortgage Loan does not have a shared appreciation or other contingent
interest feature;
(ac) Any future advances or drawings on the Mortgage Loan
made prior to the Cut-Off Date have been consolidated with the outstanding
principal amount secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term. The lien
of the Mortgage securing the consolidated principal amount is expressly insured
as having first or second lien priority by a title insurance policy, an
endorsement to the policy insuring the mortgagee's consolidated interest or by
other title evidence acceptable to the Purchaser. Any such consolidated
principal amount does not exceed the original principal amount of the Mortgage
Loan;
(ad) To the best of Seller's knowledge, there is no
proceeding pending or threatened for the total or partial condemnation of the
Mortgaged Property. The Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado, other types of water
damage, or other casualty so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the premises
were intended and each Mortgaged Property is in good repair. There have not
been any condemnation proceedings with respect to the Mortgaged Property and the
Seller has no knowledge of any such proceedings in the future;
(ae) The origination and collection practices used by the
Seller with respect to the Mortgage Loan have been, and in all respects are in
compliance with the Accepted Servicing Practices and with all applicable laws
and regulations. Any escrow payments have been collected in full compliance
with state and federal law. Unless prohibited by applicable law, an escrow of
funds has been established in an amount sufficient to pay for every item which
remains unpaid and which has been assessed but is not yet due and payable, and
all such escrowed funds are held in the possession of the Servicer on behalf of
the Trustee for the benefit of the Certificateholders and the holder of the
Exchangeable Certificate, and there exist no deficiencies in connection
therewith for which customary arrangements for repayment thereof have not been
made. No escrow deposits or escrow payments or other charges or payments due
the Seller have been capitalized under the Mortgage or the Mortgage Note;
(af) The Mortgage File contains an appraisal of the related
Mortgage Property signed prior to the approval of the Mortgage Loan application
by an appraiser acceptable to the Purchaser;
(ag) The Mortgagor has not notified the Seller, and the
Seller has no knowledge of any relief requested or allowed to the Mortgagor
under the Soldiers' and Sailors' Civil Relief Act of 1940.
(ah) To the best of the Seller's knowledge, there exists no
violation of any local, state, or federal environmental law, rule or regulation
in respect of the Mortgaged Property which violation has or could have a
material adverse effect on the market value of such Mortgaged Property. The
Seller has no knowledge of any pending action or proceeding directly involving
the related Mortgaged Property in which compliance with any environmental law,
rule or regulation is in issue; and, to the best of the Seller's knowledge,
nothing further remains to be done to satisfy in full all requirements of each
such law, rule or regulation constituting a prerequisite to the use and
employment of such Mortgaged Property;
(ai) No Mortgage Loan was made in connection with (i) the
construction of a Mortgaged Property or (ii) facilitating the trade-in or
exchange of a Mortgaged Property;
(aj) 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
the Seller has and shall maintain in its possession or in the possession of the
Servicer, available for the Purchaser's or to its assignee's inspection, and
shall deliver to the Purchaser upon demand, evidence of compliance with all such
requirements;
(ak) The Mortgage Loans are representative of the mortgage
loans in the Seller's portfolio of adjustable rate one- to four-family home
equity lines of credit;
(al) All information regarding the Mortgage Loans which could
reasonably be expected to adversely affect the value or the marketability of any
Mortgaged Property or Mortgage Loan and of which the Seller is aware has been
provided by the Seller to the Purchaser;
(am) The Seller is a community bank supervised and examined
by a State authority. The Mortgage Loan was originated in accordance with the
Seller's underwriting guidelines and was underwritten in strict accordance
therewith. The documents, instruments and agreements submitted for loan
underwriting were not falsified by or with the knowledge of the Seller and
contain no untrue statement of material fact and do not omit to state a material
fact required to be stated therein or necessary to make the information and
statements therein not misleading. The Seller has not made any representations
to the Mortgagor that are inconsistent with the mortgage instruments used;
(an) All amounts, with respect to the Mortgage Loans,
received after the Cut-Off Date and to which the Seller is not entitled, have
been deposited at the direction of the Purchaser into the Trustee Collection
Account;
(ao) To the best of the Seller's knowledge after due inquiry,
there is no delinquent recording or other tax or assessment lien on the Mortgage
Property;
(ap) The Seller has performed or directed the Servicer to
perform any and all acts required to be performed to preserve the rights and
remedies of the Purchaser in any insurance policies applicable to the Mortgage
Loan, including, without limitation, any necessary notification of insurers,
assignments of policies (other than the title policy) or interests therein, and
establishment of co-insurer, joint loan payer and mortgagee rights in favor of
the Purchaser or the assignee of the Purchaser;
(aq) The Mortgage Loan conforms, and all such Mortgage Loans
in the aggregate conform, to the description thereof set forth in the Prospectus
Supplement;
(ar) [Reserved];
(as) With respect to any Mortgage Loan that is located in any
of the 39 counties in California that have been declared federal disaster areas
due to flooding that has occurred in January, February and March 1995, if the
Seller, acting reasonably, has reason to believe that any Mortgaged Property has
been affected by flooding, the Seller will cause the Servicer to contact the
related obligor regarding the condition of the related property. The Servicer
shall be required to contact the related obligor regarding the condition of
Mortgaged Property if such obligor shall be five or more days late in making a
payment on the Mortgage Loan;
(at) As of the Cut-Off Date, no more than 0.70% of the
Mortgage Loans will be secured by Mortgaged Properties located within any single
zip code area;
(au) Approximately 0.46% of the outstanding principal balance
of the Mortgage Loans are non-owner occupied or second homes;
(av) Each Mortgage Loan constitutes a Qualified Mortgage, as
defined in the Pooling and Servicing Agreement; and
(aw) The enforceability of the Mortgage Loan and the
obligations of the Mortgagor under the Mortgage Note are not adversely affected
by the provisions in the Pooling and Servicing Agreement with respect to the
allocation and administration of collected principal and interest payments made
by a Mortgagor and any liquidation proceeds collected in respect of a defaulted
Mortgage Loan.
(ax) Each Mortgaged Property does not include cooperatives or
mobile homes attached to a foundation or otherwise and does not constitute other
than real property under state law.
(ay) Except as previously disclosed in writing to the Trustee
and the Certificate Insurer, with respect to each Mortgage Loan, there is only
one originally executed Mortgage Note not stamped as a duplicate.
(az) There do not exist any circumstances or conditions with
respect to the Mortgage, the Mortgaged Property, the Mortgagor or the
Mortgagor's credit standing that can reasonably be expected to cause private
institutional investors to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent, or adversely affect
the value or marketability of the Mortgage Loan.
(ba) No statement, report or other document constituting part
of the Mortgage File contains any untrue statement of fact or omits to state a
fact necessary to make the statements contained therein not misleading.
(bb) At the time of the origination or each Mortgage Loan
that is not a first mortgage loan, the related prior lien was not more than 30
days or more delinquent.
(bc) As of the Closing Date, there is no valid offset,
defense or counterclaim to any Mortgage Loan Agreement or Mortgage, including
without limitation, any offset defense or counterclaim against the obligation to
pay principal and interest in accordance with the Mortgage Loan Agreement.
(bd) As of the Closing Date, each Mortgage Loan and Mortgage
is an enforceable obligation of the related Mortgagor, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect affecting the enforcement of
creditors' rights generally and except as such enforceability may be limited by
general principles of equity (whether considered in a proceeding at law or in
equity); no instrument of release or waiver has been executed in connection with
any Mortgage Loan and no Mortgagor has been released, in whole or in part.
(be) The Mortgage Loans are not being transferred with any
intent to hinder, delay or defraud any creditors of the Seller.
(bf) As of the Closing Date, Irwin Union Bank and Trust
Company has not received and is not aware of, a notice of default of any senior
mortgage loan related to a Mortgaged Property which has not been cured.
(bg) No selection procedure reasonably believed by Irwin
Union Bank and Trust Company to be materially adverse to the interests of the
Certificateholders or the Certificate Insurer was utilized in selecting the
Mortgage Loans.
(bh) Each Mortgage was recorded, and, except for the blanket
assignments made pursuant to Section 2.3(a)(iii) of the Pooling and Servicing
Agreement, all subsequent assignments of the original Mortgage have been
recorded in the appropriate jurisdictions wherein such recordation is necessary
to perfect the lien thereof against the creditors of the Seller.
Section 3.3 Representations and Warranties of the Purchaser.
The Purchaser hereby represents, warrants and covenants to the Seller, as of the
date of execution of this Agreement and the Closing Date, that:
(a) The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) The Purchaser has the corporate power and authority to
purchase each Mortgage Loan and to execute, deliver and perform, and to enter
into and consummate all the transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Purchaser, and, assuming the due authorization,
execution and delivery hereof by the Seller, constitutes the legal, valid and
binding agreement of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority or court
is required for the execution, delivery and performance of or compliance by the
Purchaser with this Agreement or the consummation by the Purchaser of any of the
transactions contemplated hereby, except such as have been made on or prior to
the Closing Date; and
(e) None of the execution and delivery of this Agreement,
the purchase of the Mortgage Loans from the Seller, the consummation of the
other transactions contemplated hereby, or the fulfillment of or compliance with
the terms and conditions of this Agreement, (i) conflicts or will conflict with
the charter or bylaws of the Purchaser or conflicts or will conflict with or
results or will result in a breach of, or constitutes or will constitute a
default or results or will result in an acceleration under, any term, condition
or provision of any indenture, deed of trust, contract or other agreement or
other instrument to which the Purchaser is a party or by which it is bound and
which is material to the Purchaser, or (ii) results or will result in a
violation of any law, rule, regulation, order, judgment or decree of any court
or governmental authority having jurisdiction over the Purchaser.
Section 3.4 Repurchase Obligation for Defective
Documentation and for Breach of a Representation or Warranty. (a) Each of the
representations and warranties contained in Sections 3.1 and 3.2 shall survive
the purchase by the Purchaser of the Mortgage Loans and the subsequent transfer
thereof by (i) the Purchaser to the Depositor and (ii) by the Depositor to the
Trustee, and shall continue in full force and effect, notwithstanding any
restrictive or qualified endorsement on the Mortgage Notes and notwithstanding
subsequent termination of this Agreement, the Purchase and Sale Agreement or the
Pooling and Servicing Agreement.
(b) With respect to any representation or warranty contained
in Section 3.1 or 3.2 hereof that is made to the best of the Seller's knowledge,
if it is discovered by the Purchaser, the Servicer, any subservicer, the
Trustee, the Certificate Insurer or any Certificateholder or the holder of the
Exchangeable Certificate that the substance of such representation and warranty
was inaccurate as of the Closing Date and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan, then notwithstanding
the Seller's lack of knowledge with respect to the inaccuracy at the time the
representation or warranty was made, such inaccuracy shall be deemed a breach of
the applicable representation or warranty. Upon discovery by the Seller, the
Purchaser, the Servicer, any subservicer, the Trustee, the Certificate Insurer
or any Certificateholder or the holder of the Exchangeable Certificate of a
breach of any of such representations and warranties which materially and
adversely affects the value of Mortgage Loans or the interest of the
Certificateholders, or which materially and adversely affects the interests of
the Certificate Insurer, the Certificateholders or the holder of the
Exchangeable Certificate in the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan
(notwithstanding that such representation and warranty was made to the Seller's
best knowledge), the party discovering such breach shall, pursuant to Section
3.3 of the Pooling and Servicing Agreement, give prompt written notice to the
others. Subject to the next to last paragraph of this Section 3.4, within 60
days of the earlier of its discovery or its receipt of notice of any breach of a
representation or warranty, the Seller shall (i) promptly cure such breach in
all material respects, or (ii) purchase such Mortgage Loan at a purchase price
equal to the Principal Balance of such Mortgage Loan as of the date of purchase,
plus the greater of (1) all accrued and unpaid interest on such Principal
Balance and (2) 30 days' interest on such Principal Balance, computed at the
Mortgage Interest Rate, plus the amount of any unreimbursed Servicing Advances
made by the Servicer with respect to such Mortgage Loan, or (iii) cause the
removal of such Mortgage Loan from the Trust Fund (in which case it shall become
a Deleted Mortgage Loan) and substitute one or more Qualified Substitute
Mortgage Loans; provided, that, such substitution is effected not later than the
date which is 2 years after the Startup Day or at such later date, if the
Trustee and the Certificate Insurer receive an Opinion of Counsel to the effect
set forth below in this Section. Any such substitution shall be accompanied by
payment by the Seller of the Substitution Adjustment, if any, to be deposited in
the Collection Account or the Trustee Collection Account pursuant to the Pooling
and Servicing Agreement.
(c) As to any Deleted Mortgage Loan for which the Seller
substitutes, or has caused to be substituted therefor, a Qualified Substitute
Mortgage Loan or Loans, the Seller shall effect, or shall cause to be effected,
such substitution by delivering, or by causing the delivery, to the Trustee a
certification in the form attached to the Pooling and Servicing Agreement as
Exhibit H, executed by a Servicing Officer of the Servicer and the documents
described in Section 2.4(a) for such Qualified Substitute Mortgage Loan or
Loans. Pursuant to the Pooling and Servicing Agreement, upon receipt by the
Trustee of a certification of a Servicing Officer of the Servicer of such
substitution or purchase and, in the case of a substitution, upon receipt of the
related Trustee's Mortgage File, and the deposit of certain amounts in the
Trustee Collection Account pursuant to Section 2.4(b) of the Pooling and
Servicing Agreement (which certification shall be in the form of Exhibit H to
the Pooling and Servicing Agreement), the Trustee shall be required to release
to the Servicer for release to the Purchaser the related Trustee's Mortgage File
and shall be required to execute, without recourse, and deliver such instruments
of transfer furnished by the Purchaser as may be necessary to transfer such
Mortgage Loan to the Purchaser.
(d) Pursuant to the Pooling and Servicing Agreement, the
Servicer has agreed to deposit in the Trustee Collection Account all payments
received in connection with such Qualified Substitute Mortgage Loan or Loans
after the date of such substitution. Monthly Payments received with respect to
Qualified Substitute Mortgage Loans on or before the date of substitution will
be retained by the Seller. The Trust Fund will own all payments received on the
Deleted Mortgage Loan on or before the date of substitution, and the Seller
shall thereafter be entitled to retain all amounts subsequently received in
respect of such Deleted Mortgage Loan. Pursuant to the Pooling and Servicing
Agreement, the Servicer shall be required to give written notice to the Trustee
and the Certificate Insurer that such substitution has taken place and shall
amend the Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage
Loan from the terms of the Pooling and Servicing Agreement and the substitution
of the Qualified Substitute Mortgage Loan. The parties hereto agree to amend
the Mortgage Loan Schedule accordingly. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall be subject to the terms of the Purchase
and Sale Agreement, the Pooling and Servicing Agreement and this Agreement in
all respects, and the Seller shall be deemed to have made with respect to such
Qualified Substitute Mortgage Loan or Loans, as of the date of substitution, the
representations and warranties set forth in Sections 3.1 and 3.2 herein. On the
date of such substitution, the Seller will remit, or will cause to be remitted,
to the Servicer and pursuant to the Pooling and Servicing Agreement the Servicer
will deposit into the Trustee Collection Account an amount equal to the
Substitution Adjustment, if any.
(e) It is understood and agreed that the obligations of the
Seller set forth in Section 2.5 and this Section 3.4 to cure, purchase or
substitute for a defective Mortgage Loan as provided in Section 2.5 and this
Section 3.4 constitute the sole remedies of the Purchaser, the Depositor, the
Trustee, the Certificate Insurer and the Certificateholders respecting a breach
of the foregoing representations and warranties (other than the representation
and warranty set forth in Section 3.2(g) to the extent of any fines, penalties,
costs, or other damages or losses other than the lost economic value of the
Mortgage Loan, the value of which the remedies provided for in Section 2.5 and
3.4 shall be deemed adequate for).
(f) Any cause of action against the Seller relating to or
arising out of the breach of any representations and warranties or covenants
made in Section 2.5, 3.1 or 3.2 or this Section 3.4 shall accrue as to any
Mortgage Loan upon (i) discovery of such breach by any party and notice thereof
to the Seller, (ii) failure by the Seller to cure such breach or purchase or
substitute such Mortgage Loan as specified above, and (iii) demand upon the
Seller by the Purchaser for all amounts payable in respect of such Mortgage
Loan.
(g) Notwithstanding any contrary provision of this
Agreement, with respect to any Mortgage Loan which is not in default or as to
which no default is imminent, no purchase or substitution pursuant to Section
2.5(b) or this Section 3.4 shall be made unless the Purchaser shall comply with
Section 3.4(g) of the Purchase and Sale Agreement.
(h) Upon discovery by the Purchaser or its subsequent
transferee that any Mortgage Loan does not constitute a Qualified Mortgage (as
defined in the Pooling and Servicing Agreement), the Purchaser shall promptly
(and in any event within 5 days of the discovery) give written notice thereof to
the Seller. In connection therewith, the Seller shall repurchase or substitute
a Qualified Substitute Mortgage Loan for the affected Mortgage Loan within 60
days of the earlier of such discovery by Purchaser or the Seller's receipt of
notice, in the same manner as it would a Mortgage Loan for a breach of
representation or warranty contained in Section 3.1 or 3.2. The Purchaser shall
reconvey to the Seller the Mortgage Loan to be released pursuant hereto in the
same manner, and on the same terms and conditions, as it would a Mortgage Loan
repurchased for breach of a representation or warranty contained in Section 3.1
or 3.2 hereof.
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ARTICLE IV
THE SELLER
Section 4.1 Covenants of the Seller. The Seller covenants
to the Purchaser as follows:
(a) The Seller shall cooperate with the Purchaser in making
available all information and taking all steps reasonably necessary to permit
accountants' letters to be delivered as necessary.
(b) The Seller agrees to satisfy or cause to be satisfied on
or prior to the Closing Date, all of the conditions to the Purchaser's
obligations set forth in Section 5.1 hereof that are within the Seller's (or its
agents') control.
(c) The Seller hereby agrees to do all acts, transactions,
and things and to execute and deliver all agreements, documents, instruments,
and papers by and on behalf of the Seller as the Purchaser or its counsel may
reasonably request in order to consummate the transfer of the Mortgage Loans to
the Purchaser and the subsequent transfer thereof to the Depositor.
Section 4.2 Merger or Consolidation. The Seller will keep
in full effect its existence, rights and franchises as a banking corporation and
will obtain and preserve its qualification to do business as a foreign
corporation, in each jurisdiction necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform its
duties under this Agreement. The Seller shall send notice of any merger or
consolidation to the Purchaser and any recipients designated by the Purchaser.
Section 4.3 [RESERVED]
Section 4.4 Indemnification. (a) The Seller agrees to
indemnify and to hold the Purchaser harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Purchaser may sustain in any way related
to the failure of the Seller to perform its duties in compliance with the terms
of this Agreement. The Purchaser shall immediately notify the Seller if a claim
is made by a third party with respect to this Agreement, and the Seller shall
have the right to assume the defense of any such claim and will pay or cause to
be paid all expenses in connection therewith, including reasonable counsel fees,
and will promptly cause to be paid, discharged and satisfied, any judgment or
decree which may be entered against the Seller or the Purchaser in respect of
such claim. Pursuant to the Pooling and Servicing Agreement, the Trustee shall
reimburse the Purchaser in accordance with the Purchase and Sale Agreement for
all amounts advanced by the Purchaser in accordance with the preceding sentence
except when the claim relates directly to the failure of the Seller to perform
its duties in compliance with the terms of this Agreement.
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ARTICLE V
CONDITIONS OF CLOSING
Section 5.1 Conditions of Purchaser's Obligations. The
obligations of the Purchaser to purchase the Mortgage Loans will be subject to
the satisfaction on the Closing Date of the following conditions. Upon payment
of the purchase price for the Mortgage Loans, such conditions shall be deemed
satisfied or waived.
(a) Each of the obligations of the Seller required to be
performed by it on or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Seller under this Agreement shall be true
and correct as of the Closing Date and no event shall have occurred which, with
notice or the passage of time, would constitute a default under this Agreement.
(b) The Mortgage Loans will be acceptable to the Purchaser,
in its sole discretion.
(c) The Purchaser shall have received the Mortgage Loan
Schedule and an executed receipt acknowledging the delivery of consideration in
exchange for the Mortgage Loans.
(d) The Seller shall have furnished the Purchaser with such
other certificates of its officers or others and such other documents or
opinions as the Purchaser or its counsel may reasonably request.
Section 5.2 Conditions of Seller's Obligations. The
obligations of the Seller under this Agreement shall be subject to the
satisfaction, on the Closing Date, of the following conditions:
(a) Each of the obligations of the Purchaser required to be
performed by it at or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct as of the Closing Date.
(b) The Seller shall have received an executed receipt
acknowledging delivery of the Mortgage Loans and the Mortgage Loan Schedule to
the Trustee.
(c) The Purchaser shall have furnished the Seller with such
other certificates of its officers or others and such other documents to
evidence fulfillment of the conditions set forth in this Agreement as the Seller
may reasonably request.
Section 5.3 Termination of Purchaser's Obligations. The
Purchaser may terminate its obligations hereunder by notice to the Seller at any
time before delivery of and payment of the purchase price for the Mortgage Loans
if: (a) any of the conditions set forth in Section 5.1 are not satisfied when
and as provided therein; (b) there shall have been the entry of a decree or
order by a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Seller, or for the winding up or
liquidation of the affairs of the Seller; (c) there shall have been the consent
by the Seller to the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Seller or of or relating to
substantially all of the property of the Seller; (d) any purchase and assumption
agreement with respect to the Seller or the assets and properties of the Seller
shall have been entered into; or (e) a Termination Event shall have occurred.
The termination of the Purchaser's obligations hereunder shall not terminate the
Purchaser's rights hereunder or its right to exercise any remedy available to it
at law or in equity.
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ARTICLE VI
MISCELLANEOUS
Section 6.1 Notices. All demands, notices and
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered to or mailed by registered mail, postage
prepaid, or transmitted by telex or telegraph and confirmed by a similar mailed
writing, if to the Purchaser, addressed to the Purchaser at 500 Washington
Street, Columbus, Indiana 47201 Attention: Matthew F. Souza, with a copy
addressed to Irwin Home Equity Corporation, 2400 Camino Ramon, Suite 375, San
Ramon, California 94583 Attention: Mr. Edwin Corbin, or to such other address as
the Purchaser may designate in writing to the Seller and if to the Seller,
addressed to the Seller at Irwin Union Bank and Trust Company, 500 Washington
Street, Columbus, Indiana 47201 Attention: Mr. Matthew F. Souza, or to such
other address as the Seller may designate in writing to the Purchaser.
Section 6.2 Severability of Provisions. Any part,
provision, representation, warranty or covenant of this Agreement which is
prohibited or which is held to be void or unenforceable shall be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation, warranty or
covenant of this Agreement which is prohibited or unenforceable or is held to be
void or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction as to any Mortgage Loan shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the parties hereto waive any provision
of law which prohibits or renders void or unenforceable any provision hereof.
Section 6.3 Agreement of Seller. The Seller agrees to
execute and deliver such instruments and take such actions as the Purchaser may,
from time to time, reasonably request in order to effectuate the purpose and to
carry out the terms of this Agreement.
Section 6.4 Survival. The parties to this Agreement agree
that the representations, warranties and agreements made by each of them herein
and in any certificate or other instrument delivered pursuant hereto shall be
deemed to be relied upon by the other party hereto, notwithstanding any
investigation heretofore or hereafter made by such other party or on such other
party's behalf, and that the representations, warranties and agreements made by
the parties hereto in this Agreement or in any such certificate or other
instrument shall survive the delivery of and payment for the Mortgage Loans.
Section 6.5 Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 6.6 Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Except as expressly permitted by
the terms hereof, this Agreement may not be assigned, pledged or hypothecated by
any party hereto to a third party without the written consent of the other party
to this Agreement; provided, however, that the Purchaser may assign its rights
hereunder without the consent of the Seller.
Section 6.7 Confirmation of Intent; Grant of Security
Interest. It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Seller to the Purchaser as contemplated by this
Mortgage Loan Sale Agreement be, and be treated for all purposes as, a sale by
the Seller to the Purchaser of the Mortgage Loans. It is, further, not the
intention of the parties that such conveyance be deemed a pledge of the Mortgage
Loans by the Seller to the Purchaser to secure a debt or other obligation of the
Seller. However, in the event that, notwithstanding the intent of the parties,
the Mortgage Loans are held to continue to be property of the Seller then (a)
this Mortgage Loan Sale Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the Uniform Commercial Code;
(b) the transfer of the Mortgage Loans provided for herein shall be deemed to be
a grant by the Seller to the Purchaser of, and the Seller hereby does grant, a
security interest in all of the Seller's right, title and interest in and to the
Mortgage Loans and all amounts payable on the Mortgage Loans in accordance with
the terms thereof and all proceeds of the conversion, voluntary or involuntary,
of the foregoing into cash, instruments, securities or other property to secure
a loan from the Purchaser in the amount equal to the purchase price described in
Section 2.2 hereof; (c) the possession by the Purchaser of Mortgage Notes and
such other items of property as constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party" for purposes of perfecting the security interest pursuant to Section
9-305 of the Uniform Commercial Code; and (d) notifications to persons holding
such property, and acknowledgments, receipts or confirmations from persons
holding such property, shall be deemed notifications to, or acknowledgments,
receipts or confirmations from, financial intermediaries, bailees or agents (as
applicable) of the Purchaser for the purpose of perfecting such security
interest under applicable law. Any assignment of the interest of the Purchaser
pursuant to any provision hereof shall also be deemed to be an assignment of any
security interest created hereby. The Seller and the Purchaser shall, to the
extent consistent with this Mortgage Loan Sale Agreement, take such actions as
may be necessary to ensure that, if this Mortgage Loan Sale Agreement were
deemed to create a security interest in the Mortgage Loans, such security
interest would be deemed to be a perfected security interest of first or second
priority under applicable law and will be maintained as such throughout the term
of this Agreement.
Section 6.8 Miscellaneous. This Agreement supersedes all
prior agreements and understandings relating to the subject matter hereof.
Section 6.9 Amendments. This Agreement may be amended from
time to time by the Seller and the Purchaser by written agreement with the
written consent of the Certificate Insurer.
Section 6.10 Third Party Beneficiaries. The Seller
intends that the Certificate Insurer and the Trustee are third party
beneficiaries of each of the Seller's representations and warranties and
covenants stated herein.
Section 6.11 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER
OF JURY TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF NEW YORK.
Section 6.12 Execution in Counterparts. This Agreement may
be executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties to this Mortgage Loan Sale
Agreement have caused their names to be signed by their respective officers
thereunto duly authorized as of the date first above written.
IHE FUNDING CORP., as Purchaser
By: /s/ GREGORY F. EHLINGER
-----------------------------
Name: Gregory F. Ehlinger
Title: Vice President & Treasurer
IRWIN UNION BANK AND TRUST
COMPANY, as Seller
By: /s/ CLAUDE E. DAVIS
-----------------------------
Name: Claude E. Davis
Title: Executive Vice President
IRWIN UNION BANK AND TRUST
COMPANY, as SELLER
By: /s/ GLORIA BENNETT
------------------------------
Name: Gloria Bennett
Title: Vice President - Funds Management
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On December 6, 1995 before me, the undersigned, a Notary Public
in and for said County and State, personally appeared Gregory Ehlinger,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be Vice President and Treasurer [title] of IHE Funding Corp., a Delaware
corporation, the corporation that executed the within Mortgage Loan Sale
Agreement on behalf of said corporation, and acknowledged to me that said
corporation executed it.
/s/ ANN JANOWSKY
----------------------
Notary Public
My Commission expires:
July 18, 1996
STATE OF INDIANA )
) ss.
COUNTY OF BARTHOLOMEW )
Before me the undersigned, a Notary Public for Jennings County, State of
Indiana, personally appeared Claude E. Davis and Gloria C. Bennett and
acknowledged the execution of this instrument this 5th day of December, 1995.
/s/ HOPE M. ELLIOTT
---------------------------
Hope M. Elliott
My Commission expires:
August 12, 1998
