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SALE AND SERVICING AGREEMENT
Dated as of April 1, 1999
among
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
(Issuer)
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV
(Depositor)
EMPIRE FUNDING CORP.
(Transferor and Subservicer)
CALIFORNIA LENDING GROUP, INC., d/b/a
UNITED LENDING GROUP
(Transferor)
CONTIMORTGAGE CORPORATION
(Transferor and Servicer)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Master Servicer)
U.S. BANK NATIONAL ASSOCIATION
(Indenture Trustee and Grantor Trustee)
and
CONTIFINANCIAL CORPORATION
(Guarantor)
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
HOME LOAN ASSET BACKED NOTES
SERIES 1999-1
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Section 1.01 Definitions...................................................
Section 1.02 Other Definitional Provisions.................................
ARTICLE II
CONVEYANCE OF THE GRANTOR TRUST CERTIFICATE
Section 2.01 Conveyance of the Grantor Trust Certificate...................
Section 2.02 Ownership and Possession of Grantor Trust Certificate.........
Section 2.03 Books and Records; Principal Place of Business................
Section 2.04 Delivery of Grantor Trust Certificate; Further Assurances.....
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Depositor...............
Section 3.02 Representations and Warranties of each Transferor.............
Section 3.03 Representations, Warranties and Covenants of the Servicer.....
Section 3.03A Representations, Warranties and Covenants of the Master
Servicer.....................................................
Section 3.03B Representations, Warranties and Covenants of Empire
Subservicer..................................................
Section 3.04 Representations and Warranties Regarding Individual Home
Loans........................................................
Section 3.05 Purchase and Substitution.....................................
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE HOME LOANS
Section 4.01 Duties of the Servicer........................................
Section 4.02 Appointment and Duties of the Master Servicer.................
Section 4.03 Fidelity Bond; Errors and Omissions Insurance.................
Section 4.04 Filing of Continuation Statements.............................
Section 4.05 Appointment of Empire Funding as Subservicer..................
Section 4.06 Subservicing..................................................
Section 4.07 Successor Servicers...........................................
Section 4.08 Collections from Insurance Policies...........................
Section 4.09 Reports to the Securities and Exchange Commission; 144A
Information..................................................
Section 4.10 Recovery from Defaulted Home Loans and Liquidated Home
Loans........................................................
Section 4.11 Title, Management and Disposition of Foreclosure Property.....
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS
Section 5.01 Collection Account and Note Payment Account...................
Section 5.02 Certificate Distribution Account..............................
Section 5.03 Trust Accounts; Trust Account Property........................
Section 5.04 Allocation of Losses..........................................
ARTICLE VI
STATEMENTS AND REPORTS; WITHHOLDING
Section 6.01 Statements....................................................
Section 6.02 Withholding...................................................
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 Due-On-Sale; Due-on-Encumbrance...............................
Section 7.02 Release of Home Loan Files....................................
Section 7.03 Servicing Compensation........................................
Section 7.04 Statement as to Compliance and Financial Statements...........
Section 7.05 Independent Public Accountants' Servicing Report..............
Section 7.06 Right to Examine Servicer Records.............................
Section 7.07 Reports to the Indenture Trustee; Collection Account
Statements...................................................
Section 7.08 Financial Statements..........................................
ARTICLE VIII
(RESERVED)
ARTICLE IX
THE SERVICER
Section 9.01 Indemnification; Third Party Claims...........................
Section 9.02 Merger or Consolidation of the Servicer.......................
Section 9.03 Limitation on Liability of the Servicer and Others............
Section 9.04 Servicer Not to Resign; Assignment............................
Section 9.05 Relationship of Servicer to the Grantor Trust and the
Grantor Trustee..............................................
Section 9.06 Servicer May Own Securities...................................
ARTICLE X
DEFAULT
Section 10.01 (a) Events of Default........................................
Section 10.02 Master Servicer to Act; Appointment of Successor..............
Section 10.03 Waiver of Defaults............................................
Section 10.04 Accounting Upon Termination of Servicer.......................
ARTICLE XI
TERMINATION
Section 11.01 Termination...................................................
Section 11.02 Optional Termination..........................................
Section 11.03 Notice of Termination.........................................
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Acts of Noteholders...........................................
Section 12.02 Amendment.....................................................
Section 12.03 Recordation of Agreement......................................
Section 12.04 Duration of Agreement.........................................
Section 12.05 Governing Law.................................................
Section 12.06 Notices.......................................................
Section 12.07 Severability of Provisions....................................
Section 12.08 No Partnership................................................
Section 12.09 Counterparts..................................................
Section 12.10 Successors and Assigns........................................
Section 12.11 Headings......................................................
Section 12.12 Actions of Securityholders....................................
Section 12.13 Reports to Rating Agencies....................................
Section 12.14 Holders of the Residual Interest Certificates.................
Section 12.15 Year 2000 Compliance..........................................
Section 12.16 Transferors to Indemnify Indenture Trustee and Owner
Trustee......................................................
EXHIBITS
EXHIBIT A Home Loan Schedule
EXHIBIT B Form of Servicer's Monthly Remittance Report to Trustee
EXHIBIT C Form of Loan Liquidation Report
EXHIBIT D Schedule of Exceptions to Representations and Warranties
EXHIBIT E Form of 10-K Report of Issuer
This Sale and Servicing Agreement is entered into effective as of
April 1, 1999, among EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1, a Delaware
business trust (the "ISSUER" or the "OWNER TRUST"), PAINEWEBBER MORTGAGE
ACCEPTANCE CORPORATION IV, a Delaware corporation, as Depositor (the
"DEPOSITOR"), EMPIRE FUNDING CORP., an Oklahoma corporation ("EMPIRE FUNDING"),
as Transferor and Subservicer, California Lending Group, Inc., d/b/a United
Lending Group, a California corporation ("ULG"), as Transferor, ContiMortgage
Corporation, a Delaware corporation ("CONTIMORTGAGE"), as Transferor and
Servicer (in such capacity, the "SERVICER") (each of Empire Funding, ULG and
ContiMortgage, a "TRANSFEROR"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a
national banking association, as Master Servicer (the "MASTER SERVICER"), U.S.
BANK NATIONAL ASSOCIATION, a national banking association, as Indenture Trustee
on behalf of the Noteholders (in such capacity, the "INDENTURE TRUSTEE") and as
Grantor Trustee on behalf of the holder of the Grantor Trust Certificate (in
such capacity, the "GRANTOR TRUSTEE"), and ContiFinancial Corporation, a
Delaware corporation, as Guarantor (the "GUARANTOR").
W I T N E S S E T H:
In consideration of the mutual agreements herein contained, the
parties hereto hereby agree as follows for the benefit of each of them and for
the benefit of the holders of the Notes issued under the Indenture, the Residual
Interest Certificates issued under the Owner Trust Agreement and the Grantor
Trust Certificate issued under the Grantor Trust Agreement:
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Unless otherwise specified, all
calculations of interest described herein shall be made on the basis of a
360-day year consisting of twelve 30-day months, except that with respect to the
Class A-1 Notes, calculations of accrued interest shall be made on the basis of
a 360-day year and the actual number of days elapsed in each Accrual Period.
ACCEPTED SERVICING PROCEDURES: Servicing procedures that satisfy the
following: (a) meet at least the same standards the Servicer would follow in
exercising reasonable care in servicing mortgage loans such as the Home Loans
held for its own account; (b) comply with applicable state and federal law; (c)
comply with the provisions of the related Debt Instruments, Mortgages and
Manufactured Home Contracts; and (d) give due consideration to the accepted
standards of practice of prudent consumer loan servicers that service mortgage
loans comparable to the Home Loans and the reliance placed by the Grantor Trust
Holders, the Master Servicer and Securityholders on the Servicer for the
servicing of the Home Loans, but without regard to:
(i) any relationship that the Servicer, any Subservicer or any
Affiliate of the Servicer or any Subservicer may have with the related
Obligor;
(ii) the ownership of any Notes, the Grantor Trust Certificate or
the Residual Interest Certificates by the Servicer or any Affiliate of the
Servicer;
(iii) the Servicer's or any Subservicer's obligation to make
Servicing Advances; or
(iv) the Servicer's or any Subservicer's right to receive
compensation for its services hereunder with respect to any particular
transaction.
In determining whether to undertake certain servicing actions with
respect to one or more Defaulted Home Loans, the Servicer is expected to
consider the reasonable likelihood of (A) recovering an economically significant
amount attributable to the outstanding interest and principal owing on such Home
Loan as a result of such actions, in excess of (B) the costs and expenses to
obtain such recovery (including without limitation any Servicing Advances and,
if applicable, the outstanding indebtedness of all Superior Liens), and in
relation to (C) the expected timing of such recovery therefrom.
ACCRUAL PERIOD: With respect to the Class A-1 Notes, the period
beginning on the Payment Date in the calendar month preceding the month in which
the related Payment Date occurs (or, in the case of the first Payment Date, the
Closing Date) and ending on the day preceding the related Payment Date. With
respect to the other Classes of Notes, the calendar month preceding the month in
which the related Payment Date occurs (except that in the case of the first
Payment Date, there will be no Accrual Period for such other Classes of Notes
and in the case of the Payment Date occurring in June 1999, the Accrual Period
shall be the period commencing on the Closing Date and ending on the last day of
May 1999).
AFFILIATE: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, the term "control", when used with respect
to any specified Person, means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have corresponding meanings.
AGREEMENT: This Sale and Servicing Agreement and all amendments
hereof and supplements hereto.
ALLOCABLE LOSS AMOUNT: With respect to each Payment Date, the
excess, if any, of (a) the aggregate of the Class Principal Balances of all
Classes of Notes (after giving effect to all payments on such Payment Date) over
(b) the Pool Principal Balance as of the end of the preceding Due Period.
ALLOCABLE LOSS AMOUNT PRIORITY: With respect to any Payment Date,
sequentially, to the Class B-2 Notes, the Class B-1 Notes, the Class M-2 Notes
and the Class M-1 Notes, in that order.
ASSIGNMENT OF MORTGAGE: With respect to each Home Loan secured by a
Mortgage, an assignment, notice of transfer or equivalent instrument sufficient
under the laws of the jurisdiction wherein the related Mortgaged Property is
located to reflect or record the sale of the related Home Loan which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering Mortgages secured by Mortgaged Properties located
in the same county, if permitted by law.
AVAILABLE COLLECTION AMOUNT: With respect to any Payment Date, as
determined by the Servicer or the Subservicer as of the related Determination
Date, an amount without duplication equal to the sum of: (i) all amounts
received on the Home Loans or required to be paid by the Servicer, the
Subservicer or each Transferor during the related Due Period (exclusive of
amounts not required to be deposited by the Servicer or the Subservicer in the
Collection Account pursuant to SECTION 5.01(B)(I) hereof and amounts permitted
to be withdrawn by the Indenture Trustee from the Collection Account pursuant to
SECTION 5.01(B)(III) hereof) as reduced by any portion thereof that may not be
withdrawn therefrom pursuant to an order of a United States bankruptcy court of
competent jurisdiction imposing a stay pursuant to section 362 of the United
States Bankruptcy Code; (ii) any and all income or gain from investments in the
Collection Account, Note Payment Account and Certificate Distribution Account;
(iii) upon exercise of optional termination of the Notes pursuant to SECTION
11.02 hereof, the Termination Price; and (iv) the Purchase Price paid for any
Home Loans purchased pursuant to SECTION 3.05 hereof prior to the related
Determination Date and the Substitution Adjustment to be deposited in the
Collection Account in connection with any substitution, in each case prior to
the related Determination Date.
AVAILABLE PAYMENT AMOUNT: With respect to any Payment Date, the
Available Collection Amount, minus the amount required to be paid from the Note
Payment Account pursuant to SECTION 5.01(C)(I).
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking institutions in the City of New York, in the city in which
the corporate trust office of the Indenture Trustee or Grantor Trustee is
located or in the city in which the Servicer's or Subservicer's servicing
operations or the Master Servicer's master servicing operations are located and
are authorized or obligated by law or executive order to be closed.
CERTIFICATE DISTRIBUTION ACCOUNT: The account designated as
such, established and maintained pursuant to SECTION 5.02 hereof.
CERTIFICATE REGISTER: The register established pursuant to
SECTION 3.4 of the Owner Trust Agreement.
CERTIFICATEHOLDER: A holder of a Residual Interest Certificate.
CLASS: With respect to the Notes, all Notes bearing the same
class designation.
CLASS A NOTES: Collectively the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3,
Class A-4 and Class A-5 Notes.
CLASS A-1 NOTE, CLASS A-2 NOTE, CLASS A-3 NOTE, CLASS A-4 NOTE,
CLASS A-5 NOTE, CLASS M-1 NOTE, CLASS M-2 NOTE, CLASS B-1 NOTE AND CLASS B-2
NOTE: The respective meanings assigned thereto in the Indenture.
CLASS B-1 OPTIMAL PRINCIPAL BALANCE: With respect to any Payment
Date prior to the Stepdown Date, zero; and with respect to any other Payment
Date, the Pool Principal Balance as of the end of the related Due Period minus
the sum of (i) the aggregate Class Principal Balance of the Class A Notes and
the Mezzanine Notes (after taking into account any payments made on such Payment
Date in reduction of the Class Principal Balances of the Classes of Class A
Notes and Mezzanine Notes) and (ii) the greater of (x) the sum of (1) 13.00% of
the Pool Principal Balance as of the end of the related Due Period and (2) the
Overcollateralization Target Amount for such Payment Date (calculated without
giving effect to the provisos in the definition thereof) and (y) 0.50% of the
Original Pool Principal Balance; PROVIDED, HOWEVER, that such amount shall never
be less than zero or greater than the Original Class Principal Balance of the
Class B-1 Notes.
CLASS B-2 OPTIMAL PRINCIPAL BALANCE: With respect to any Payment
Date prior to the Stepdown Date, zero; and with respect to any other Payment
Date, the Pool Principal Balance as of the end of the related Due Period minus
the sum of (i) the aggregate Class Principal Balance of the Class A Notes, the
Mezzanine Notes and the Class B-1 Notes (after taking into account any payments
made on such Payment Date in reduction of the Class Principal Balances of the
Classes of Class A Notes, Mezzanine Notes and Class B-1 Notes) and (ii) the
Overcollateralization Target Amount for such Payment Date; PROVIDED, HOWEVER,
that such amount shall never be less than zero or greater than the Original
Class Principal Balance of the Class B-2 Notes.
CLASS FACTOR: With respect to each Class and any date of
determination, the then applicable Class Principal Balance of such Class divided
by the Original Class Principal Balance thereof.
CLASS M-1 OPTIMAL PRINCIPAL BALANCE: With respect to any Payment
Date prior to the Stepdown Date, zero; and with respect to any other Payment
Date, the Pool Principal Balance as of the end of the related Due Period minus
the sum of (i) the aggregate Class Principal Balance of the Class A Notes (after
taking into account payments made on such Payment Date in reduction of the Class
Principal Balances of the Classes of Class A Notes) and (ii) the greater of (x)
the sum of (1) 41.50% of the Pool Principal Balance as of the end of the related
Due Period and (2) the Overcollateralization Target Amount for such Payment Date
(calculated without giving effect to the provisos in the definition thereof) and
(y) 0.50% of the Original Pool Principal Balance; PROVIDED, HOWEVER, that such
amount shall never be less than zero or greater than the Original Class
Principal Balance of the Class M-1 Notes.
CLASS M-2 OPTIMAL PRINCIPAL BALANCE: With respect to any Payment
Date prior to the Stepdown Date, zero; with respect to any other Payment Date,
the Pool Principal Balance as of the end of the related Due Period minus the sum
of (i) the aggregate Class Principal Balance of the Class A Notes (after taking
into account any payments made on such Payment Date in reduction of the Class
Principal Balances of the Classes of Class A Notes) plus the Class Principal
Balance of the Class M-1 Notes (after taking into account any payments made on
such Payment Date in reduction of the Class Principal Balance of the Class M-1
Notes) and (ii) the greater of (x) the sum of (1) 28.50% of the Pool Principal
Balance as of the end of the related Due Period and (2) the
Overcollateralization Target Amount for such Payment Date (without giving effect
to the provisos in the definition thereof) and (y) 0.50% of the Original Pool
Principal Balance; PROVIDED, HOWEVER, that such amount shall never be less than
zero or greater than the Original Class Principal Balance of the Class M-2
Notes.
CLASS PRINCIPAL BALANCE: With respect to each Class of Notes and as
of any date of determination, the Original Class Principal Balance of such Class
reduced by the sum of (i) all amounts previously distributed in respect of
principal of such Class on all previous Payment Dates and (ii) with respect to
the Class M-1, Class M-2, Class B-1 and Class B-2 Notes, all Allocable Loss
Amounts applied in reduction of principal of such Classes on all previous
Payment Dates.
CLEAN-UP CALL DATE: The first Payment Date on which the Pool
Principal Balance declines to 10% or less of the Original Pool Principal
Balance.
CLOSING DATE: May 3, 1999.
CODE: The Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
COLLECTION ACCOUNT: The account designated as such, established
and maintained by the Servicer in the name of the Indenture Trustee, in
accordance with SECTION 5.01(A)(I) hereof.
COMBINATION LOAN: A loan, the proceeds of which were used by the
Obligor in combination to finance property improvements and for debt
consolidation, cash out refinancing or other purposes.
COMBINED LOAN-TO-VALUE RATIO: With respect to any Home Loan, the
fraction, expressed as a percentage, (a) the numerator of which is the principal
balance of such Home Loan at origination plus, in the case of a junior lien Home
Loan, the aggregate outstanding principal balance of each related Superior Lien
on the date of origination of such Home Loan, and (b) the denominator of which
is the value as determined pursuant to the applicable Transferor's underwriting
guidelines of the related Property at the time of origination of such Home Loan.
CONTIMORTGAGE: ContiMortgage Corporation, a Delaware corporation.
CONTIMORTGAGE HOME LOAN PURCHASE AGREEMENT: The Home Loan Purchase
Agreement, dated as of April 1, 1999, among ContiMortgage, the Guarantor and the
Depositor.
CONTIMORTGAGE INDEMNIFICATION AND CONTRIBUTION AGREEMENT: The
Indemnification and Contribution Agreement, dated April 29, 1999, among the
Depositor, PaineWebber Incorporated, Bear, ▇▇▇▇▇▇▇ & Co. Inc., ContiMortgage
and the Guarantor.
CREDIT SCORE: The credit evaluation scoring methodology
developed by Fair, ▇▇▇▇▇ and Company.
CUSTODIAL AGREEMENT: The custodial agreement dated as of April 1,
1999 by and among the Depositor, each Transferor, the Servicer, and U.S. Bank
National Association, a national banking association, as the custodian and the
Grantor Trustee, providing for the retention of the Grantor Trustee's Home Loan
Files by such custodian on behalf of the Grantor Trustee.
CUSTODIAN: Any custodian appointed by the Grantor Trustee
pursuant to a Custodial Agreement, which custodian shall not be affiliated
with the Servicer, any Transferor, any Subservicer or the Depositor. U.S.
Bank National Association, shall be the initial Custodian pursuant to the
terms of the Custodial Agreement.
CUSTODIAN FEE: If applicable, the annual fee payable to any
Custodian, calculated and payable monthly on each Payment Date pursuant to
SECTION 5.01(C)(I) hereof equal to the fee, if any, set forth in the Custodial
Agreement.
CUSTODIAN'S FINAL CERTIFICATION: As defined in SECTION 2.06(C)
of the Grantor Trust Agreement.
CUSTODIAN'S INITIAL CERTIFICATION: As defined in SECTION 2.06(A)
of the Grantor Trust Agreement.
CUSTODIAN'S UPDATED CERTIFICATION: As defined in SECTION 2.06(C)
of the Grantor Trust Agreement.
CUT-OFF DATE: The close of business on March 31, 1999 (or with
respect to any Home Loan originated or acquired by a Transferor after March 31,
1999, the date of origination or acquisition of such Home Loan).
DCR: Duff & ▇▇▇▇▇▇ Credit Rating Co.
DEBT CONSOLIDATION LOAN: A loan, the proceeds of which were
primarily used by the related Obligor for debt consolidation or cash out
refinance purposes or for purposes other than to finance property improvements.
DEBT INSTRUMENT: The note or other evidence of indebtedness
evidencing the indebtedness of an Obligor under a Home Loan.
DEFAULTED HOME LOAN: With respect to any date of determination, any
Home Loan, including, without limitation, any Liquidated Home Loan with respect
to which any of the following has occurred as of the end of the preceding Due
Period: (a) foreclosure or similar proceedings have been commenced; (b) any
portion of a Monthly Payment becomes 180 days past due by the related Obligor;
or (c) the Servicer or any Subservicer has determined in good faith and in
accordance with the Accepted Servicing Procedures that such Home Loan is in
default for a period in excess of 30 days or imminent default and that such
default or imminent default involves the nonpayment of any Monthly Payment or a
default which has or would have a material adverse affect on such Home Loan.
DEFECTIVE HOME LOAN: As defined in SECTION 3.05 hereof.
DELETED HOME LOAN: A Home Loan replaced or to be replaced by one
or more than one Qualified Substitute Home Loan.
DELINQUENT: A Home Loan is "Delinquent" if any Monthly Payment due
thereon is not made by the close of business on the day such Monthly Payment is
scheduled to be paid; PROVIDED, that such Home Loan shall not be "Delinquent" if
the Monthly Payment for such Home Loan has been modified pursuant to a Chapter
13 bankruptcy proceeding by the Obligor and such modified Monthly Payment due
thereon is made by the close of business on the day such modified Monthly
Payment is scheduled to be paid. A Home Loan is "30 days Delinquent" if such
Monthly Payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such
Monthly Payment was due or, if there is no such corresponding day (e.g., as when
a 30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month. The
determination of whether a Home Loan is "60 days Delinquent," "90 days
Delinquent," etc., shall be made in like manner.
DELIVERY: When used with respect to Trust Account Property means the
delivery of such Trust Account Property in a manner that results in the
transferee having either the status of a perfected security interest free of any
adverse claims or a holder in due course in accordance with the following: (a)
in the case of "certificated securities" or "uncertificated securities" (in
either case as defined in Article 8 of the UCC), the applicable provisions of
Article 8 of the UCC, and in the case of "instruments," "accounts" or "general
intangibles" (in either case as defined in Article 9 of UCC), the applicable
provisions of Article 9 of the UCC; or (b) in the case of book entry securities
governed by Federal law, the applicable provisions of Federal law.
DENOMINATION: With respect to a Note, the portion of the Original
Class Principal Balance represented by such Note as specified on the face
thereof.
DEPOSITOR: PaineWebber Mortgage Acceptance Corporation IV, a
Delaware corporation, and any successor thereto.
DETERMINATION DATE: With respect to any Payment Date, the 14th
calendar day of the month in which such Payment Date occurs or if such day is
not a Business Day, the immediately preceding Business Day.
DUE DATE: With respect to a Monthly Payment, day of the month on
which such Monthly Payment is due from the Obligor on a Home Loan.
DUE PERIOD: With respect to any Determination Date or Payment Date,
the calendar month immediately preceding such Determination Date or Payment
Date, as the case may be.
ELIGIBLE ACCOUNT: At any time, an account which is any of the
following: (i) an account maintained with a depository institution (A) the
long-term debt obligations of which are at such time rated by each Rating Agency
in one of their two highest long-term rating categories or (B) the short-term
debt obligations of which are then rated by each Rating Agency in their highest
short-term rating category; (ii) an account the deposits in which are fully
insured by either the Bank Insurance Fund or the Savings Association Insurance
Fund of the FDIC; (iii) a trust account (which shall be a "SEGREGATED TRUST
ACCOUNT") maintained with the corporate trust department of a federal or state
chartered depository institution or trust company with trust powers and acting
in its fiduciary capacity for the benefit of the Indenture Trustee and the
Issuer, which depository institution or trust company shall have capital and
surplus of not less than $50,000,000; or (iv) an account that will not cause any
Rating Agency to downgrade or withdraw its then-current rating(s) assigned to
the Notes, as evidenced in writing by such Rating Agency. (Each reference in
this definition of "ELIGIBLE ACCOUNT" to the Rating Agency shall be construed as
a reference to S&P and DCR).
ELIGIBLE SERVICER: A Person that (i) has demonstrated the ability
professionally and competently to service a portfolio of mortgage loans similar
to the Home Loans and (ii) has a net worth calculated in accordance with GAAP of
at least $500,000.
EMPIRE FUNDING: Empire Funding Corp., an Oklahoma corporation.
EMPIRE HOME LOAN PURCHASE AGREEMENT: The Home Loan Purchase
Agreement, dated as of April 1, 1999, between Empire Funding and the Depositor.
EMPIRE INDEMNIFICATION AND CONTRIBUTION AGREEMENT: The
Indemnification and Contribution Agreement, dated April 29, 1999, among the
Depositor, PaineWebber Incorporated, Bear, ▇▇▇▇▇▇▇ & Co. Inc. and Empire
Funding.
EMPIRE PRIOR SECURITIZATIONS: The following series of transactions
in which Empire Funding sold home loans and Asset Backed Certificates or Home
Loan Asset Backed Notes were issued: (i) Empire Funding Home Loan REMIC Trust
1997-A Asset Backed Certificates, Series 1997-A; (ii) Empire Funding Home Loan
Owner Trust 1997-1 Home Loan Asset Backed Notes, Series 1997-1; (iii) Empire
Funding Home Loan Owner Trust 1997-2 Home Loan Asset Backed Notes, Series
1997-2; (iv) Empire Funding Home Loan Owner Trust 1997-3 Home Loan Asset Backed
Notes 1997-3; (v) Empire Funding Home Loan Owner Trust 1997-4 Home Loan Asset
Backed Notes 1997-4; (vi) Empire Funding Home Loan Owner Trust 1997-5 Home Loan
Asset Backed Notes 1997-5; (vii) Empire Funding Home Loan Owner Trust 1998-1
Home Loan Asset Backed Notes 1998-1; (viii) Empire Funding Home Loan Owner Trust
1998-2 Home Loan Asset Backed Notes 1998-2; and (ix) Empire Funding Home Loan
Owner Trust 1998-3 Home Loan Asset Backed Notes 1998-3.
EMPIRE SUBSERVICER: Empire Funding, in its capacity as Subservicer
hereunder.
EMPIRE SUBSERVICER EVENT OF DEFAULT: As described in Section 4.05(g)
hereof.
EMPIRE SUBSERVICING COMPENSATION: The Empire Subservicing Fee and
the other amounts to which Empire Subservicer, is entitled pursuant to SECTION
4.05(B) hereof.
EMPIRE SUBSERVICING FEE: As to each Home Loan (including any
Foreclosed Loan, but excluding any Liquidated Home Loan), the fee payable
monthly to Empire Funding, in its capacity as Subservicer pursuant to SECTION
4.05(B) hereunder, on each Payment Date, which shall be the product of the
Empire Subservicing Fee Rate and the Principal Balance of such Home Loan as of
the beginning of the immediately preceding Due Period, divided by 12.
EMPIRE SUBSERVICING FEE RATE: 0.4825% (48.25 basis points) for the
related Due Period; provided, however, if the Master Servicer Fee Rate is 0.080%
(8 basis points), the Empire Subservicing Fee shall be 0.46% (46 basis points).
EVENT OF DEFAULT: As described in SECTION 10.01 hereof.
EXCESS SPREAD: With respect to any Payment Date, the excess of (a)
the Available Payment Amount over (b) the Regular Payment Amount.
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
FHLMC: ▇▇▇▇▇▇▇ Mac (f/k/a Federal Home Loan Mortgage Corporation)
and any successor thereto.
FIDELITY BOND: As described in SECTION 4.03 hereof.
FNMA: ▇▇▇▇▇▇ ▇▇▇ (f/k/a Federal National Mortgage Association) and
any successor thereto.
FORECLOSED LOAN: As of any date of determination, any Home Loan that
has been discharged as a result of (i) the completion of repossession,
foreclosure or comparable proceedings; (ii) the Grantor Trustee's acceptance of
the deed or other evidence of title to any related Mortgaged Property in lieu of
foreclosure or other comparable proceeding; or (iii) the acquisition by the
Grantor Trustee of title to any related Property by operation of law.
FORECLOSURE PROPERTY: Any real or personal property securing a
Foreclosed Loan that has been acquired by the Servicer or any Subservicer
through foreclosure, deed in lieu of foreclosure or similar proceedings in
respect of the related Home Loan.
GAAP: Generally accepted accounting principles as in effect in the
United States.
GRANTOR TRUST: Empire Funding Grantor Trust 1999-1, formed pursuant
to the Grantor Trust Agreement.
GRANTOR TRUST AGREEMENT: The Grantor Trust Agreement dated as of
April 1, 1999, among PaineWebber Mortgage Acceptance Corporation IV, as
Depositor, the Transferors, the Servicer and the Grantor Trustee.
GRANTOR TRUST CERTIFICATE: The trust certificate issued by the
Grantor Trust evidencing an undivided beneficial ownership interest of 100% of
the Grantor Trust.
GRANTOR TRUST HOLDER: Any holder of the Grantor Trust Certificate.
GRANTOR TRUSTEE: U.S. Bank National Association, a national banking
association, as Grantor Trustee under the Grantor Trust Agreement, or any
successor Grantor Trustee hereunder.
GRANTOR TRUSTEE FEE: As to any Payment Date, $0.00.
GRANTOR TRUSTEE'S HOME LOAN FILE: As defined in SECTION 2.05(A) of
the Grantor Trust Agreement.
GUARANTOR: ContiFinancial Corporation, a Delaware corporation.
HOME LOAN: Any Debt Consolidation Loan, Combination Loan or
Manufactured Home Loan that is included in the Home Loan Pool. As applicable, a
Home Loan shall be deemed to refer to the related Debt Instrument, the Mortgage,
the Manufactured Home Contract and any related Foreclosure Property, and shall
include, among other items, all Monthly Payments with a Due Date on or after the
Cut-Off Date, except that the Transferors shall retain 80% of the interest
collected thereon during the first Due Period.
HOME LOAN FILE: As to each Home Loan, the Grantor Trustee's Home
Loan File and the Servicer's Home Loan File.
HOME LOAN INTEREST RATE: The fixed annual rate of interest borne by
a Debt Instrument, as shown on the related Home Loan Schedule as the same may be
modified by the Servicer in accordance with SECTION 4.01(C) or 4.10 hereof.
HOME LOAN POOL: The pool of Home Loans conveyed to the Grantor
Trustee pursuant to the Grantor Trust Agreement on the Closing Date, together
with the rights and obligations of a holder thereof, and the payments thereon
and proceeds therefrom received after the applicable Cut-Off Date, as identified
on the Home Loan Schedule annexed hereto as Exhibit A.
HOME LOAN PURCHASE AGREEMENTS: The ContiMortgage Home Loan Purchase
Agreement, the Empire Home Loan Purchase Agreement and the ULG Home Loan
Purchase Agreement.
HOME LOAN SCHEDULE: The schedule of Home Loans set forth on Exhibit
A attached hereto, as amended or supplemented from time to time specifying, with
respect to each Home Loan, the following information: (i) the applicable
Transferor and such Transferor's Home Loan number; (ii) the Obligor's name and
the street address; (iii) the current principal balance; (iv) the original
principal amount with respect to any Home Loan originated by the applicable
Transferor and the principal amount purchased by the applicable Transferor with
respect to a Home Loan acquired by such Transferor subsequent to its
origination; (v) any related Combined Loan-to-Value Ratio as of the date of the
origination of the related Home Loan; (vi) the paid through date; (vii) the Home
Loan Interest Rate; (viii) the final maturity date under the Debt Instrument;
(ix) the Monthly Payment; (x) the occupancy status of the Property, if any; (xi)
whether it is secured by a Mortgage or Manufactured Home Contract, if any, and
the lien priority thereof; (xii) the original term of the Debt Instrument;
(xiii) the Credit Score, if applicable; and (xiv) the debt to income ratio of
the related Obligor.
INDEMNIFICATION AND CONTRIBUTION AGREEMENTS: The Empire
Indemnification and Contribution Agreement, the ContiMortgage Indemnification
and Contribution Agreement and the ULG Indemnification and Contribution
Agreement.
INDENTURE: The Indenture, dated as of April 1, 1999, between the
Issuer and the Indenture Trustee.
INDENTURE TRUSTEE: U.S. Bank National Association, a national
banking association, as Indenture Trustee under the Indenture and this Agreement
acting on behalf of the Noteholders, or any successor indenture trustee under
the Indenture or this Agreement.
INDENTURE TRUSTEE FEE: As to any Payment Date, the greater of (a)
one-twelfth of the Indenture Trustee Fee Rate times the Pool Principal Balance
as of the opening of business on the first day of the calendar month preceding
the calendar month of such Payment Date (or, with respect to the first Payment
Date, the Original Pool Principal Balance) and (b) one-twelfth of $8,400.
INDENTURE TRUSTEE FEE RATE: 0.008% per annum.
INDEPENDENT: When used with respect to any specified Person, such
Person (i) is in fact independent of any Transferor, the Servicer, the
Subservicer, the Master Servicer, the Depositor or any of their respective
Affiliates, (ii) does not have any direct financial interest in, or any material
indirect financial interest in, any of the Transferors, the Subservicer, the
Servicer, the Master Servicer, the Depositor or any of their respective
Affiliates and (iii) is not connected with any of the Transferors, the Servicer,
the Master Servicer, the Subservicer, the Depositor or any of their respective
Affiliates, as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions; PROVIDED, HOWEVER, that a
Person shall not fail to be Independent of the Transferors, the Servicer, the
Master Servicer, the Subservicer, the Depositor or any of their respective
Affiliates merely because such Person is the beneficial owner of 1% or less of
any class of securities issued by any Transferor, the Master Servicer, the
Subservicer, the Servicer, the Depositor or any of their respective Affiliates,
as the case may be.
INDEPENDENT ACCOUNTANTS: A firm of nationally recognized certified
public accountants which is Independent.
INSURANCE POLICIES: With respect to any Property, any related
insurance policy.
INSURANCE PROCEEDS: With respect to any Property, all amounts
collected by the Grantor Trustee, the Servicer or the Subservicer in respect of
Insurance Policies (net of any expenses that are incurred by the Grantor
Trustee, the Servicer or the Subservicer in connection with the collection of
such proceeds and not otherwise reimbursed to the Grantor Trustee, the Servicer
or the Subservicer) and not required to be applied to the restoration of any
such Property or paid to the related Obligor.
LIBOR: With respect to each Accrual Period (other than the initial
Accrual Period) and each Class of LIBOR Notes, the rate for United States dollar
deposits for one month that appears on the Telerate Screen Page 3750 as of 11:00
a.m., London time, on the related LIBOR Determination Date. If such rate does
not appear on such page (or such other page as may replace that page on that
service, or if such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be reasonably selected by the
Indenture Trustee), LIBOR for the applicable Accrual Period will be the
Reference Bank Rate. If no such quotations can be obtained by the Indenture
Trustee and no Reference Bank Rate is available, LIBOR will be LIBOR applicable
to the preceding Accrual Period. LIBOR for the initial Accrual Period will be
4.912% per annum.
LIBOR BUSINESS DAY: Any day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
LIBOR DETERMINATION DATE: With respect to each Accrual Period (other
than the first Accrual Period), the second LIBOR Business Day before the first
day of such Accrual Period, as determined by the Indenture Trustee.
LIBOR NOTES: The Class A-1 Notes.
LIQUIDATED HOME LOAN: With respect to any date of determination, any
Foreclosure Property or any Home Loan in respect of which a Monthly Payment is
in excess of 30 days past due and as to which the Servicer or any Subservicer
has determined that all amounts which it reasonably and in good faith expects to
collect have been recovered from or on account of such Home Loan or the related
Foreclosure Property; PROVIDED, HOWEVER, that in any event any Home Loan or the
related Foreclosure Property shall be deemed uncollectible and therefore be a
Liquidated Home Loan upon the earliest to occur of: (i) the liquidation or
disposition of such Home Loan or the related Foreclosure Property; (ii) the
determination by the Servicer or the Subservicer in accordance with the Accepted
Servicing Procedures that there is no reasonable likelihood of (A) recovering an
economically significant amount in excess of (B) the costs and expenses to
obtain such recovery (including without limitation any Servicing Advances and,
if applicable, the outstanding indebtedness of all Superior Liens) and in
relation to (C) the expected timing of such recovery therefrom, or (iii) the
date on which any portion of a Monthly Payment on any Home Loan is in excess of
180 days past due.
LIQUIDATION PROCEEDS: With respect to a Liquidated Home Loan, any
cash amounts received in connection with the liquidation or disposition of such
Liquidated Home Loan, whether through trustee's sale, foreclosure sale or other
disposition, any cash amounts received in connection with the management of the
Foreclosure Properties from Foreclosed Home Loans and any other amounts required
to be deposited in the Collection Account pursuant to SECTION 5.01(B) hereof, in
each case other than Insurance Proceeds and Released Property Proceeds.
LOSS REIMBURSEMENT DEFICIENCY: With respect to any Payment Date and
the Class M-1 Notes, Class M-2 Notes, Class B-1 Notes or the Class B-2 Notes,
the amount of Allocable Loss Amounts applied to the reduction of the Class
Principal Balance of such Class and not reimbursed pursuant to SECTION 5.01
hereof as of such Payment Date plus interest accrued on the unreimbursed portion
thereof at the applicable Note Interest Rate through the end of the Accrual
Period immediately preceding such Payment Date; PROVIDED, HOWEVER, that no
interest shall accrue on any amount of such accrued and unpaid interest.
MAJORITY NOTEHOLDERS: Until such time as the sum of the Class
Principal Balances of all Classes of Notes has been reduced to zero, the holder
or holders of in excess of 50% of the Class Principal Balance of all Classes of
Notes.
MAJORITY RESIDUAL INTERESTHOLDERS: The holder or holders of more
than 50% of the Residual Interest Certificates.
MANUFACTURED HOME: The personal property encumbered by a lien or
security interest created pursuant to a Manufactured Home Contract which secures
the Debt Instrument evidencing a Home Loan, but excluding any such property
whereby the related encumbrance was created pursuant to a mortgage.
MANUFACTURED HOME CONTRACT: Any manufactured housing installment
sale contract or manufactured housing installment loan agreement whereby the
related security interest was not created pursuant to a mortgage, including,
without limitation, all related security interests or security instruments
creating a lien in accordance with applicable law to secure the Debt Instrument
which evidences a Home Loan.
MANUFACTURED HOME LOAN: A loan, the proceeds of which were used by
the Obligor primarily for the purposes of financing the acquisition or
refinancing of a Manufactured Home, but excluding any such loan whereby the
related security interest was created pursuant to a mortgage.
MASTER SERVICER: Norwest Bank Minnesota, National Association, a
national banking association, as Master Servicer hereunder, or any successor
Master Servicer hereunder.
MASTER SERVICER COMPENSATION: The Master Servicer Fee and other
amounts to which the Master Servicer is entitled pursuant to SECTION 4.02(A)
hereof.
MASTER SERVICER FEE: As to each Home Loan (including any Home Loan
that has been foreclosed and has become a Foreclosure Property, but excluding
any Liquidated Home Loan that had been liquidated prior to the beginning of the
preceding Due Period), the fee payable monthly to the Master Servicer on each
Payment Date, which shall equal the product of (a) one twelfth (1/12) of the
Master Servicer Fee Rate and (b) the Principal Balance of such Home Loan as of
the beginning of the immediately preceding Due Period.
MASTER SERVICER FEE RATE: 0.035% (3.5 basis points) for the related
Due Period; provided, however, in the event that the Master Servicer is not
appointed as the master servicer in all of the Empire Prior Securitizations (at
a fee rate of 0.020% (2.0 basis points) per annum) by August 31, 1999, the
Master Servicer Fee Rate shall be increased to 0.080% (8 basis points)
commencing with the Due Period beginning on September 1, 1999.
MATURITY DATE means, with respect to each Class of Notes, the
applicable maturity date set forth below:
CLASS MATURITY DATE
----- -------------
▇-▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇
▇-▇ September 25, 2011
A-3 April 25, 2013
▇-▇ ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇
▇-▇ May 25, 2030
M-1 May 25, 2030
M-2 May 25, 2030
▇-▇ ▇▇▇ ▇▇, ▇▇▇▇
▇-▇ May 25, 2030
MEZZANINE NOTEHOLDERS' INTEREST CARRY-FORWARD AMOUNT: With respect
to any Payment Date, the excess, if any, of (A) the Mezzanine Noteholders'
Monthly Interest Payment Amount for the preceding Payment Date plus any
outstanding Mezzanine Noteholders' Interest Carry-Forward Amount for preceding
Payment Dates, over (B) the amount in respect of interest that is actually
deposited in the Note Payment Account on such preceding Payment Date net of the
Senior Noteholders' Interest Payment Amount for such preceding Payment Date; it
being understood that the interest of the Class M-1 Noteholders in the Mezzanine
Noteholders' Interest Carry-Forward Amount is senior to that of the Class M-2
Noteholders.
MEZZANINE NOTEHOLDERS' INTEREST PAYMENT AMOUNT: With respect to any
Payment Date, the sum of the Mezzanine Noteholders' Monthly Interest Payment
Amount for such Payment Date and the Mezzanine Noteholders' Interest
Carry-Forward Amount for such Payment Date.
MEZZANINE NOTEHOLDERS' MONTHLY INTEREST PAYMENT AMOUNT: With respect
to each Payment Date and the Classes of Mezzanine Notes, the interest accrued
during the related Accrual Period at the respective Note Interest Rates on the
respective Class Principal Balances of such Classes immediately preceding such
Payment Date (or, in the case of the first Payment Date, on the Closing Date)
after giving effect to all payments of principal to the holders of such Classes
of Notes on or prior to such preceding Payment Date.
MEZZANINE NOTES: The Class M-1 Notes and Class M-2 Notes.
MONTHLY CUT-OFF DATE: The last day of any calendar month and, with
respect to any Payment Date, the last day of the calendar month immediately
preceding such Payment Date.
MONTHLY PAYMENT: The scheduled monthly payment of principal and/or
interest required to be made by an Obligor on the related Home Loan, as set
forth in the related Debt Instrument.
MORTGAGE: The mortgage, deed of trust or other security instrument
creating a lien in accordance with applicable law on a Mortgaged Property to
secure the Debt Instrument which evidences a Home Loan.
MORTGAGED PROPERTY: The real property encumbered by the Mortgage
which secures the Debt Instrument evidencing a Home Loan.
MULTIPLIER: The Multiplier will initially equal 1.7 and may from
time to time be permanently modified to a lesser amount (including zero) in the
event that the Issuer shall have delivered to the Indenture Trustee written
confirmation from each Rating Agency that the rating assigned by it to each
Class of Notes which it originally rated will not be downgraded or withdrawn as
a result of such reduction.
NET DELINQUENCY CALCULATION AMOUNT: With respect to any Payment
Date, the excess, if any, of (x) the product of the Multiplier and the Six-Month
Rolling Delinquency Average over (y) the aggregate of the amounts of Excess
Spread for the three preceding Payment Dates.
NET LIQUIDATION PROCEEDS: With respect to any Payment Date,
Liquidation Proceeds received during the related Due Period, net of any
reimbursements to the Servicer or Subservicer made from such amounts for the
following: (i) any unreimbursed Servicing Compensation or Empire Subservicing
Compensation; and (ii) Servicing Advances made and any other fees and expenses
paid in connection with the foreclosure, conservation and liquidation of the
related Liquidated Home Loan or Foreclosure Property pursuant to SECTIONS 4.10
or 4.11 hereof.
NET LOAN LOSSES: With respect to any Defaulted Home Loan that is
subject to a modification pursuant to SECTION 4.10 hereof or pursuant to a legal
proceeding (including a Chapter 13 bankruptcy proceeding), an amount equal to
the portion of the Principal Balance, if any, released in connection with such
modification.
NONRECOVERABLE SERVICING ADVANCE: With respect to any Defaulted Home
Loan or any Foreclosure Property, any Servicing Advance previously made and not
reimbursed from late or other fee collections, Liquidation Proceeds, Insurance
Proceeds or the Released Property Proceeds following the liquidation or
disposition of such Defaulted Home Loan or Foreclosure Property, as evidenced by
an Officer's Certificate delivered to the Indenture Trustee and the Master
Servicer.
NOTE: Any of the Senior Notes, the Mezzanine Notes or the
Subordinate Notes.
NOTE INTEREST RATE: With respect to each Class of Notes, the annual
rate of interest payable to the holders of such Class of Notes, as specified
below:
CLASS NOTE INTEREST RATE (1)
----- ----------------------
Class A-1 Floating Rate (2)
Class A-2 6.29%
Class A-3 6.44%
Class A-4 6.82%
Class A-5 7.38%
Class M-1 8.03%
Class M-2 9.00%
Class B-1 9.00%
Class B-2 9.00%
(1) Commencing on the first day of the Accrual Period in which the
Clean-up Call Date occurs, the Note Interest Rate shall be
increased by 0.50% per annum.
(2) Interest will accrue on the Class A-1 Notes during each
Accrual Period at a per annum interest rate equal to LIBOR for
the related LIBOR Determination Date plus 0.20% subject to a
maximum rate equal to 12.00%. The Note Interest Rate
applicable to the Class A-1 Notes for the initial Accrual
Period will be 5.112% per annum.
NOTE PAYMENT ACCOUNT: The Eligible Account established and
maintained pursuant to SECTION 5.01(A)(II) hereof.
NOTE PERCENTAGE INTEREST: With respect to any Note of any Class, an
amount equal to the initial denomination of such Note divided by the Original
Class Principal Balance of the related Class of Notes.
NOTE REDEMPTION AMOUNT: As of any date of determination, an amount
without duplication equal to the sum of (i) the then outstanding Class Principal
Balances of the Classes of Notes plus all accrued and unpaid interest thereon at
their applicable Note Interest Rates through the last day of the Accrual Period
relating to such Payment Date, (ii) any Trust Fees and Expenses due and unpaid
on such date and (iii) any Servicing Advance Reimbursement Amount.
NOTEHOLDER: A holder of a Note.
NOTEHOLDERS' INTEREST PAYMENT AMOUNT: The sum of the Senior
Noteholders' Interest Payment Amount, the Mezzanine Noteholders' Interest
Payment Amount and the Subordinate Noteholders' Interest Payment Amount.
OBLIGOR: Each obligor on a Debt Instrument.
OFFICER'S CERTIFICATE: A certificate delivered to the Indenture
Trustee, the Master Servicer, or the Issuer signed by the President or a Vice
President, an Assistant Vice President or other officer of the Depositor, the
Servicer, the Subservicer, the Master Servicer or any Transferor, in each case,
as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel (who is acceptable
to the Rating Agencies), who may be employed by any Transferor, the Servicer,
the Subservicer, the Master Servicer, the Depositor or any of their respective
Affiliates.
ORIGINAL CLASS PRINCIPAL BALANCE: With respect to the Classes of
Notes, as follows: Class A-1: $59,749,000; Class A-2: $35,032,000; Class A-3:
$29,161,000; Class A-4: $30,168,000; Class A-5: $15,890,000; Class M-1:
$28,125,000; Class M-2: $16,250,000; Class B-1: $19,375,000; and Class B-2:
$16,250,000.
ORIGINAL POOL PRINCIPAL BALANCE: $250,000,566.42 which is the Pool
Principal Balance as of the Cut-Off Date.
OUTSTANDING: As defined in the Indenture.
OVERCOLLATERALIZATION AMOUNT: With respect to any Payment Date, the
amount equal to the excess of (A) the Pool Principal Balance as of the end of
the related Due Period, over (B) the aggregate of the Class Principal Balances
of the Notes (after giving effect to the payments made on such date pursuant to
SECTION 5.01(D) hereof).
OVERCOLLATERALIZATION DEFICIENCY AMOUNT: With respect to any Payment
Date, the excess, if any, of the Overcollateralization Target Amount over the
Overcollateralization Amount (after giving effect to all prior payments on the
Classes of Notes and to any prior distribution on the Residual Interest
Certificates on such Payment Date pursuant to SECTION 5.01(D) hereof).
OVERCOLLATERALIZATION REDUCTION AMOUNT: With respect to any Payment
Date that occurs on or after the Stepdown Date, the lesser of (1) the excess, if
any, of (a) the Overcollateralization Amount (assuming principal payments on the
Notes on such Payment Date are equal to the Regular Principal Payment Amount
without deduction of this Overcollateralization Reduction Amount), over (b) the
Overcollateralization Target Amount, and (2) the Regular Principal Payment
Amount (as determined without the deduction of this Overcollateralization
Reduction Amount therefrom) on such Payment Date. Prior to the occurrence of a
Stepdown Date, the Overcollateralization Reduction Amount shall be zero.
OVERCOLLATERALIZATION TARGET AMOUNT: (I) With respect to any Payment
Date occurring prior to the Stepdown Date, an amount equal to the greater of (x)
3.50% of the Original Pool Principal Balance and (y) the Net Delinquency
Calculation Amount; and (II) with respect to any other Payment Date, an amount
equal to the greater of (x) 7.00% of the Pool Principal Balance as of the end of
the related Due Period and (y) the Net Delinquency Calculation Amount; PROVIDED,
HOWEVER, that the Overcollateralization Target Amount shall in no event be less
than 0.50% of the Original Pool Principal Balance or greater than the sum of the
aggregate Class Principal Balances of all Classes of Notes, PROVIDED, HOWEVER,
if the sum of the aggregate Class Principal Balances of all Classes of Notes is
less than 0.50% of the Original Pool Principal Balance, the
Overcollateralization Target Amount may be less than 0.50% of the Original Pool
Principal Balance but shall in no event be greater than the sum of the aggregate
Class Principal Balances of all Classes of Notes.
OWNER TRUST: The Issuer.
OWNER TRUST AGREEMENT: The Owner Trust Agreement dated as of April
1, 1999, among the Depositor, Empire Funding, the Owner Trustee and U.S. Bank
National Association.
OWNER TRUST ESTATE: The assets subject to this Agreement, the Owner
Trust Agreement and the Indenture and assigned to the Issuer, which assets
consist of: (i) the contribution of $1 referred to in SECTION 2.5 of the Owner
Trust Agreement, (ii) the Grantor Trust Certificate, (iii) all payments on and
distributions in respect of the Grantor Trust Certificate, (iv) such assets and
funds as are from time to time deposited in the Trust Accounts, including
amounts on deposit in such accounts which are invested in Permitted Investments,
and (v) all proceeds of every kind and nature whatsoever in respect of any or
all of the foregoing.
OWNER TRUSTEE: Wilmington Trust Company, as owner trustee under the
Owner Trust Agreement, and any successor owner trustee under the Owner Trust
Agreement.
OWNER TRUSTEE FEE: The annual fee of $4,000 in equal monthly
installments to Empire Subservicer, or, if Empire Subservicer is no longer the
Subservicer hereunder, the Servicer, which shall in turn pay such $4,000 to the
Owner Trustee on the Payment Date occurring in April each year during the term
of this Agreement commencing in April 2000; PROVIDED, HOWEVER, that the initial
Owner Trustee fee shall be paid by Empire Funding on the Closing Date.
OWNERSHIP INTEREST: As to any Note, any ownership or security
interest in such Note, including any interest in such Note as the holder thereof
and any other interest therein, whether direct or indirect, legal or beneficial,
as owner or as pledgee.
PAYMENT DATE: The 25th day of any month or if such 25th day is not a
Business Day, the first Business Day immediately following such day, commencing
in May 1999.
PAYMENT STATEMENT: As defined in SECTION 6.01 hereof.
PERCENTAGE INTEREST: As defined in the Owner Trust Agreement.
PERMITTED INVESTMENTS: Each of the following:
(1) obligations of, or guaranteed as to principal and interest by,
the United States of America, FHLMC, FNMA or any agency or instrumentality of
the United States of America, the obligations of which are backed by the full
faith and credit of the United States of America;
(2) a repurchase agreement that satisfies the following criteria:
(A) it must be between the Indenture Trustee and either (x) primary dealers on
the Federal Reserve reporting dealer list which are rated one of the two highest
ratings for long-term unsecured debt obligations by each Rating Agency or (y)
banks rated in the highest categories for long-term unsecured debt obligations
by each Rating Agency; and (B) it must be in writing and include the following
terms: (a) the securities acceptable for transfer are either (i) direct U.S.
government obligations or (ii) obligations of a federal agency that are backed
by the full faith and credit of the U.S. government or by FNMA or FHLMC; (b) a
term no greater than 60 days for any repurchase transaction; (c) the collateral
must be delivered to the Indenture Trustee or a third party custodian acting as
agent for the Indenture Trustee by appropriate book entries and confirmation
statements, and must have been delivered before or simultaneously with payment
(i.e., perfection by possession of certificated securities); and (d) the
securities sold thereunder must be valued weekly, marked-to-market at current
market price plus accrued interest and the value of the collateral must be equal
to at least 104% of the amount of cash transferred by the Indenture Trustee
under the repurchase agreement and, if the value of the securities held as
collateral declines to an amount below 104% of the cash transferred by the
Indenture Trustee plus accrued interest (i.e., a margin call), then additional
cash and/or acceptable securities must be transferred to the Indenture Trustee
to satisfy such margin call; PROVIDED, HOWEVER, that if the securities used as
collateral are obligations of FNMA or FHLMC, then the value of the securities
held as collateral must equal at least 105% of the cash transferred by the
Indenture Trustee under such repurchase agreement;
(3) certificates of deposit, time deposits and bankers acceptances
of any United States depository institution or trust company incorporated under
the laws of the United States or any state, including the Indenture Trustee
which have an original term to maturity of not more than 365 days; PROVIDED,
HOWEVER, that the debt obligations of such depository institution or trust
company at the date of the acquisition thereof have been rated by each Rating
Agency in the highest long-term rating categories;
(4) deposits, including deposits with the Indenture Trustee, which
are fully insured by the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC, as the case may be;
(5) commercial paper of any corporation incorporated under the laws
of the United States or any state thereof, including corporate Affiliates of the
Indenture Trustee, which at the date of acquisition is rated by each Rating
Agency in its highest short-term rating category and which has an original
maturity of not more than 365 days;
(6) debt obligations rated by each Rating Agency at the time at
which the investment is made in its highest long-term rating category which have
an original term to maturity of not more than 365 days (or those investments
specified in (3) above with depository institutions which have debt obligations
rated by each Rating Agency in the highest long-term rating categories);
(7) money market funds which are rated by each Rating Agency at the
time at which the investment is made in its highest long-term rating category
including any such money market funds for which the Master Servicer or any
affiliate of the Master Servicer acts as investment manager or advisor; provided
that any such money market funds which provide for demand withdrawals being
conclusively deemed to satisfy any maturity requirements for Permitted
Investments set forth in this Agreement; or
(8) any other demand, money market or time deposit obligation,
security or investment as may be acceptable to each Rating Agency at the time at
which the investment is made;
PROVIDED, HOWEVER, that no instrument described in the foregoing subparagraphs
shall evidence either the right to receive (a) only interest with respect to the
obligations underlying such instrument or (b) both principal and interest
payments derived from obligations underlying such instrument where the interest
and principal payments with respect to such instrument provide a yield to
maturity at par greater than 120% of the yield to maturity at par of the
underlying obligations; and PROVIDED, FURTHER, that no instrument described in
the foregoing subparagraphs may be purchased at a price greater than par if such
instrument may be prepaid or called at a price less than its purchase price
prior to stated maturity.
Each reference in this definition of "PERMITTED INVESTMENTS" to the
Rating Agency shall be construed, in the case of each subparagraph above
referring to each Rating Agency, as a reference to each of S&P and DCR.
PERSON: Any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, estate,
national banking association, unincorporated organization or government or any
agency or political subdivision thereof.
POOL PRINCIPAL BALANCE: With respect to any date of determination,
the aggregate Principal Balances of the Home Loans as of the end of the related
Due Period; PROVIDED, HOWEVER, that the Pool Principal Balance on any Payment
Date on which the Termination Price is to be paid to Noteholders will be deemed
to have been equal to zero as of such date.
PRINCIPAL BALANCE: With respect to any Home Loan or related
Foreclosure Property, (i) at the Cut-Off Date, the outstanding unpaid principal
balance of the Home Loan as of the Cut-Off Date and (ii) with respect to any
date of determination, the outstanding unpaid principal balance of the Home Loan
as of the last day of the preceding Due Period (after giving effect to all
payments received thereon and the allocation of any Net Loan Losses with respect
thereto which relates to such Due Period), without giving effect to amounts
received in respect of such Home Loan or related Foreclosure Property after such
Due Period; PROVIDED, HOWEVER, that any Liquidated Home Loan shall have a
Principal Balance of zero.
PRINCIPAL PREPAYMENT: With respect to any Home Loan and any Due
Period, any principal amount received on a Home Loan in excess of the principal
of the Monthly Payment due in such Due Period.
PRIVATE PLACEMENT MEMORANDUM: The Private Placement Memorandum
to be prepared in connection with the Class B-2 Notes.
PROPERTY: a Mortgaged Property or Manufactured Home.
PROPERTY STATES: Each state in which any Property securing a Home
Loan is located as set forth in the Home Loan Schedule.
PROSPECTUS: The Depositor's final Prospectus dated April 29, 1999 as
supplemented by the Prospectus Supplement dated April 29, 1999.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated April 29,
1999 prepared by the Depositor in connection with the issuance and sale of the
Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3, Class A-4, Class A-5, Class M-1, Class M-2 and
Class B-1 Notes.
PURCHASE PRICE: With respect to a Defective Home Loan, the Principal
Balance thereof as of the date of purchase, plus all accrued and unpaid interest
on such Defective Home Loan to and including the date of repurchase computed at
the applicable Home Loan Interest Rate, plus the amount of any unreimbursed
Servicing Advances made by the Servicer or any Subservicer with respect to such
Defective Home Loan (after deducting therefrom any amounts received in respect
of such repurchased Defective Home Loan and being held in the Collection Account
for future distribution to the extent such amounts represent recoveries of
principal not yet applied to reduce the related Principal Balance or interest
for the period from and after the date of repurchase).
QUALIFIED SUBSTITUTE HOME LOAN: A home loan or home loans
substituted for a Deleted Home Loan pursuant to SECTION 2.06 of the Grantor
Trust Agreement or SECTION 3.05 hereof, which (i) has or have an interest rate
or rates of (a) no lower than the Home Loan Interest Rate for the Deleted Home
Loan, and (b) not more than 2.0 percentage points greater than the Home Loan
Interest Rate for the Deleted Home Loan, (ii) matures or mature not more than
one year than, and not more than one year earlier, than the maturity date of
Deleted Home Loan, has a maturity date no later than April 30, 2029 and an
original term to maturity of less than or equal to 30 years, (iii) has or have a
principal balance or principal balances (after application of all payments
received on or prior to the date of substitution) equal to or less than the
Principal Balance or Balances of the Deleted Home Loan or Loans as of such date,
(iv) has a Credit Score not less than the Credit Score of the Deleted Home Loan,
(v) has or have a lien priority equal or superior to that of the Deleted Home
Loan or Loans, (vi) has or have a borrower or borrowers with a debt-to-income
ratio no higher than the debt-to-income ratio of the Obligor with respect to the
Deleted Loan, and (vii) complies or comply as of the date of substitution with
each representation and warranty set forth in SECTION 3.04 hereof and is or are
not more than 29 days delinquent as of the date of substitution for such Deleted
Home Loan or Loans. For purposes of determining whether multiple mortgage loans
proposed to be substituted for one or more Deleted Home Loans pursuant to
SECTION 2.06 of the Grantor Trust Agreement or SECTION 3.05 hereof are in fact
"Qualified Substitute Home Loans" as provided above, the criteria specified in
clauses (i), (ii) and (iii) above may be considered on an aggregate or weighted
average basis, rather than on a loan-by-loan basis (i.e., so long as the
weighted average Home Loan Interest Rate of any loans proposed to be substituted
is not less than the Home Loan Interest Rate for the designated Deleted Home
Loan or Loans and not more than two percentage points greater than the Home Loan
Interest Rate for the designated Deleted Home Loan or Loans, the requirements of
clause (i) above would be deemed satisfied).
RATING AGENCIES: S&P and DCR. If no such organization or successor
is any longer in existence, "RATING AGENCY" shall be a nationally recognized
statistical rating organization or other comparable person designated by the
Servicer, notice of which designation shall have been given to the Indenture
Trustee and the Issuer.
RATINGS: The ratings initially assigned to the Notes by the Rating
Agencies, as evidenced by letters from the Rating Agencies.
RECORD DATE: With respect to the first Payment Date, the Closing
Date. With respect to each other Payment Date, the close of business on the last
Business Day of the month immediately preceding the month in which such Payment
Date occurs.
REFERENCE BANK RATE: With respect to any Accrual Period, the
arithmetic mean (rounded upwards, if necessary, to the nearest one sixteenth of
a percent) of the offered rates for United States dollar deposits for one month
that are offered by the Reference Banks as of 11:00 a.m., New York City time, on
the second LIBOR Business Day prior to the first day of such Accrual Period to
prime banks in the London interbank market for a period of one month in amounts
approximately equal to the outstanding Class Principal Balance of the Class A-1
Notes, PROVIDED that at least two such Reference Banks provide such rate. If
fewer than two offered rates appear, the Reference Bank Rate will be arithmetic
mean of the rates quoted by one or more major banks in New York City, selected
by the Indenture Trustee, as of 11:00 a.m., New York City time, on such date for
loans in U.S. Dollars to leading European Banks for a period of one month in
amounts approximately equal to the outstanding Class Principal Balance of the
Class A-1 Notes. If no such quotation can be obtained, the Reference Bank Rate
will be the Reference Bank Rate applicable to the preceding Accrual Period.
REFERENCE BANKS: Three money center banks selected by the Indenture
Trustee.
REGULAR PAYMENT AMOUNT: With respect to any Payment Date, the lesser
of (a) the Available Payment Amount and (b) the sum of (i) the Noteholders'
Interest Payment Amount and (ii) the Regular Principal Payment Amount.
REGULAR PRINCIPAL PAYMENT AMOUNT: On each Payment Date, an amount
equal to the lesser of:
(A) the aggregate of the Class Principal Balances of the Classes of
Notes immediately prior to such Payment Date; and
(B) the sum of (i) each scheduled payment of principal collected by
the Servicer or the Subservicer in the related Due Period, (ii) all Principal
Prepayments applied by the Servicer or the Subservicer during such related Due
Period, (iii) the principal portion of all Net Liquidation Proceeds, Insurance
Proceeds and Released Property Proceeds received during the related Due Period,
(iv) that portion of the Purchase Price of any repurchased Home Loan which
represents principal received prior to the related Determination Date, (v) the
principal portion of any Substitution Adjustments required to be deposited in
the Collection Account as of the related Determination Date and (vi) on the
Payment Date on which the Issuer and the Grantor Trust are to be terminated
pursuant to SECTION 11.02 hereof, the Termination Price (net of any accrued and
unpaid interest, Trust Fees and Expenses due and unpaid on such date and
Servicing Advance Reimbursement Amount),
PROVIDED, HOWEVER, that if such Payment Date is on or after a Stepdown Date,
then with respect to the payment of principal to the Noteholders the foregoing
amount will be reduced by the Overcollateralization Reduction Amount, if any,
for such Payment Date (but not to an amount less than zero).
RELEASED PROPERTY PROCEEDS: With respect to any Home Loan, proceeds
received by the Servicer or the Subservicer in connection with (i) a taking of
an entire Property by exercise of the power of eminent domain or condemnation or
(ii) any release of part of the Property from the lien of the related Mortgage
or Manufactured Home Contract, as applicable, whether by partial condemnation,
sale or otherwise; which proceeds are not released to the Obligor in accordance
with applicable law, Accepted Servicing Procedures and this Agreement.
RESIDUAL INTEREST: The meaning assigned thereto in the Owner Trust
Agreement.
RESIDUAL INTEREST CERTIFICATE: The meaning assigned thereto in the
Owner Trust Agreement.
RESPONSIBLE OFFICER: When used with respect to the Indenture Trustee
or Grantor Trustee, any officer within the Corporate Trust Office of the
Indenture Trustee or Grantor Trustee, as the case may be, including any Vice
President, Assistant Vice President, Secretary, Assistant Secretary or any other
officer of the Indenture Trustee or Grantor Trustee, as the case may be,
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject. When used with respect to the
Issuer, any officer in the Corporate Trust Administration Department of the
Owner Trustee with direct responsibility for the administration of the Owner
Trust Agreement and this Agreement on behalf of the Issuer. When used with
respect to the Depositor, any Transferor, the Servicer, the Master Servicer, the
Subservicer or any Custodian, the President or any Vice President, Assistant
Vice President, or any Secretary or Assistant Secretary.
S&P: Standard and Poor's Ratings Services, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, or any successor thereto.
SECURITIES: The Notes or Residual Interest Certificates.
SECURITYHOLDER: Any Noteholder or Certificateholder.
SENIOR NOTEHOLDERS' INTEREST CARRY-FORWARD AMOUNT: With respect to
any Payment Date, the excess, if any, of (A) the Senior Noteholders' Monthly
Interest Payment Amount for the preceding Payment Date plus any outstanding
Senior Noteholders' Interest Carry-Forward Amount for preceding Payment Dates,
over (B) the amount in respect of interest that is actually deposited in the
Note Payment Account on such preceding Payment Date.
SENIOR NOTEHOLDERS' INTEREST PAYMENT AMOUNT: With respect to any
Payment Date, the sum of the Senior Noteholders' Monthly Interest Payment Amount
for such Payment Date and the Senior Noteholders' Interest Carry-Forward Amount
for such Payment Date.
SENIOR NOTEHOLDERS' MONTHLY INTEREST PAYMENT AMOUNT: With respect to
each Payment Date and the Classes of Class A Notes, the interest accrued during
the related Accrual Period at the respective Note Interest Rates on the
respective Class Principal Balances of such Classes immediately preceding such
Payment Date (or, in the case of the first Payment Date, beginning on the
Closing Date) after giving effect to all payments of principal to the holders of
such Classes of Notes on or prior to such preceding Payment Date.
SENIOR NOTES: The Class A Notes.
SENIOR OPTIMAL PRINCIPAL BALANCE: With respect to any Payment Date
prior to the Stepdown Date, zero; with respect to any other Payment Date, an
amount equal to the Pool Principal Balance as of the end of the related Due
Period minus the greater of (a) the sum of (1) 64.00% of the Pool Principal
Balance as of the end of the related Due Period and (2) the
Overcollateralization Target Amount for such Payment Date (without giving effect
to the provisos in the definition thereof) and (b) 0.50% of the Original Pool
Principal Balance; PROVIDED, HOWEVER, that such amount shall never be less than
zero or greater than the sum of the Original Class Principal Balances of the
Senior Notes.
SERIES OR SERIES 1999-1: Empire Funding Home Loan Asset Backed
Notes, Series 1999-1.
SERVICER: ContiMortgage, in its capacity as the servicer hereunder,
or any successor appointed as herein provided.
SERVICER'S FISCAL YEAR: The fiscal year of ContiMortgage, which is
April 1st through March 31st of each year, or the fiscal year of any successor
Servicer.
SERVICER'S HOME LOAN FILES: In respect of each Home Loan, all
documents customarily included in the Servicer's loan file for the related type
of Home Loan as specifically set forth in SECTION 2.05(B) of the Grantor Trust
Agreement.
SERVICER'S MONTHLY REMITTANCE REPORT: A report prepared and computed
by the Servicer in substantially the form of Exhibit B attached hereto.
SERVICER TERMINATION EVENT: The termination of the Servicer pursuant
to SECTION 10.01 hereof or the resignation of the Servicer pursuant to SECTION
9.04 hereof.
SERVICING ADVANCE REIMBURSEMENT AMOUNT: Any Nonrecoverable Servicing
Advances and, with respect to any date of determination and with respect to the
receipt of proceeds from or the liquidation of a Home Loan for which any
Servicing Advances have been made, the amount of any such Servicing Advances
that have not been reimbursed as of such date.
SERVICING ADVANCES: Subject to SECTION 4.01(B) hereof, all
reasonable, customary and necessary "out of pocket" costs and expenses advanced
or paid by the Servicer or the Subservicer with respect to the Home Loans in
accordance with the performance by the Servicer or the Subservicer of its
servicing obligations hereunder, including, but not limited to, the costs and
expenses for (i) the preservation, restoration and protection of any related
Property, including without limitation advances in respect of real estate taxes
and assessments, (ii) any collection, enforcement or judicial proceedings,
including without limitation foreclosures, collections and liquidations pursuant
to SECTION 4.10 hereof, (iii) the conservation, management and sale or other
disposition of a Foreclosure Property pursuant to SECTION 4.11 hereof, (iv) the
preservation of the security for a Home Loan if any lienholder under a Superior
Lien has accelerated or intends to accelerate the obligations secured by such
Superior Lien pursuant to SECTION 4.10 hereof, and (v) the satisfaction,
cancellation, release or discharge of any Home Loan or any related Mortgage or
Manufactured Home Contract in accordance with this Agreement; PROVIDED, HOWEVER,
that such Servicing Advances (plus accrued interest thereon from the date of
such advance to the date of reimbursement and at the rate equal to the
Servicer's cost of funds) are reimbursable to the Servicer or the Subservicer
out of the expected late collections, Liquidation Proceeds, Insurance Proceeds
or Released Property Proceeds for the related Home Loan, Obligor or Property.
SERVICING COMPENSATION: The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to SECTION 7.03 hereof.
SERVICING FEE: As to each Home Loan (including any Home Loan that
has been foreclosed and has become a Foreclosure Property, but excluding any
Liquidated Home Loan), the fee payable monthly to the Servicer on each Payment
Date, which shall be the product of the Servicing Fee Rate and the Principal
Balance of such Home Loan as of the beginning of the immediately preceding Due
Period, divided by 12. The Servicing Fee includes any servicing fees owed or
payable to any Subservicer (other than Empire Funding), which fees shall be paid
from the Servicing Fee.
SERVICING FEE RATE: If Empire Funding is the Subservicer pursuant to
SECTION 4.05, the Servicing Fee Rate shall equal (a) 0.4825% (48.25 basis
points) if the Master Servicer Fee Rate is 0.035% (3.5 basis points) or (b)
0.46% (46 basis points) if the Master Servicer Fee Rate is 0.080% (8 basis
points). If Empire Funding is not the Subservicer pursuant to SECTION 4.05, the
Servicing Fee Rate shall equal (a) 0.965% (96.5 basis points) if the Master
Servicer Fee Rate is 0.035% (3.5 basis points) or (b) 0.92% (92 basis points) if
the Master Servicer Fee Rate is 0.080% (8 basis points).
SERVICING OFFICER: Any officer of the Servicer, Master Servicer, or
Subservicer involved in, or responsible for, the administration and servicing of
the Home Loans whose name and specimen signature appears on a list of servicing
officers annexed to an Officer's Certificate furnished by the Servicer, the
Master Servicer or the Subservicer, respectively, to the Grantor Trustee, the
Master Servicer and the Indenture Trustee, on behalf of the Securityholders, as
such list may from time to time be amended.
SIX-MONTH ROLLING DELINQUENCY AVERAGE: With respect to any Payment
Date, the average for such Payment Date and the five preceding Payment Dates of
the respective ratios, expressed as a percentage, equal to (x) the aggregate
Principal Balances of all Home Loans that are 60 days or more Delinquent
(excluding any Liquidated Home Loans) as of the end of each of the related Due
Periods, divided by (y) the respective Pool Principal Balance as of the end of
such Due Period.
STEPDOWN DATE: The first Payment Date occurring after April 2002, as
to which the aggregate of the Class Principal Balances of the Class A Notes
after giving effect to payments of principal on such Payment Date will be able
to be reduced on such Payment Date (such determination to be made by the
Indenture Trustee prior to giving effect to payment of principal on such Payment
Date) to the excess of:
(I) the Pool Principal Balance as of the end of the related Due
Period over
(II) the greater of
(a) the sum of
(1) 64.00% of the Pool Principal Balance as of the
end of the related Due Period and
(2) the Overcollateralization Target Amount for such
Payment Date (such amount to be calculated (x)
without giving effect to the provisos in the
definition thereof and (y) pursuant only to clause
(II) of the definition thereof); and
(b) 0.50% of the Original Pool Principal Balance.
SUBORDINATE NOTEHOLDERS' INTEREST CARRY-FORWARD AMOUNT: With respect
to any Payment Date, the excess, if any, of (A) the Subordinate Noteholders'
Monthly Interest Payment Amount for the preceding Payment Date plus any
outstanding Subordinate Noteholders' Interest Carry-Forward Amount for preceding
Payment Dates, over (B) the amount in respect of interest that is actually
deposited in the Note Payment Account on such preceding Payment Date net of the
Senior Noteholders' Interest Payment Amount and the Mezzanine Noteholders'
Interest Payment Amount for such preceding Payment Date; it being understood
that the interest of the Class B-1 Noteholders in the Subordinate Noteholders'
Interest Carry-Forward Amount is senior to that of the Class B-2 Noteholders.
SUBORDINATE NOTEHOLDERS' INTEREST PAYMENT AMOUNT: With respect to
any Payment Date, the sum of the Subordinate Noteholders' Monthly Interest
Payment Amount for such Payment Date and the Subordinate Noteholders' Interest
Carry-Forward Amount for such Payment Date.
SUBORDINATE NOTEHOLDERS' MONTHLY INTEREST PAYMENT AMOUNT: With
respect to each Payment Date and the Classes of Subordinate Notes, the interest
accrued during the related Accrual Period at the respective Note Interest Rates
on the respective Class Principal Balances of such Classes immediately preceding
such Payment Date (or, in the case of the first Payment Date, on the Closing
Date) after giving effect to all payments of principal to the holders of such
Classes of Notes on or prior to such preceding Payment Date, and in the case of
the Class B-2 Notes, subject to reduction pursuant to SECTION 5.04(B).
SUBORDINATE NOTES: The Class B-1 Notes and Class B-2 Notes.
SUBSERVICER: Initially, Empire Funding. If Empire Funding shall no
longer be the Subservicer pursuant to SECTION 4.05, any Person with which the
Servicer has entered into a Subservicing Agreement and which is an Eligible
Servicer and satisfies any requirements set forth in SECTION 4.06(A) hereof in
respect of the qualifications of a Subservicer.
SUBSERVICING ACCOUNT: An account established by a Subservicer
pursuant to a Subservicing Agreement, which account must be an Eligible
Account.
SUBSERVICING AGREEMENT: Any agreement between the Servicer and any
Subservicer (other than Empire Subservicer) relating to subservicing and/or
administration of any or all Home Loans as provided in SECTION 4.06(A) hereof,
copies of which shall be made available, along with any modifications thereto,
to the Issuer, the Grantor Trustee, the Master Servicer and the Indenture
Trustee.
SUBSTITUTE COLLATERAL: Any Substitute Collateral as defined in
SECTION 4.10(C) hereof.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution
occurs pursuant to SECTIONS 2.06 of the Grantor Trust Agreement or SECTION 3.05
hereof, the amount, if any, by which (a) the sum of the aggregate principal
balance (after application of principal payments received on or before the date
of substitution) of any Qualified Substitute Home Loans as of the date of
substitution, plus any accrued and unpaid interest thereon to the date of
substitution, is less than (b) the sum of the aggregate of the Principal
Balances, together with accrued and unpaid interest thereon to the date of
substitution, of the related Deleted Home Loans.
SUPERIOR LIEN: With respect to any Home Loan which is secured by a
lien other than a first priority lien, the mortgage loan(s) having a superior
priority lien on the related Mortgaged Property.
TERMINATION PRICE: As of any date of determination, an amount
without duplication equal to the greater of (A) the Note Redemption Amount and
(B) the sum of (i) the Principal Balance of each Home Loan included in the
Grantor Trust as of the applicable Monthly Cut-Off Date; (ii) all unpaid
interest accrued on the Principal Balance of each such Home Loan at the related
Home Loan Interest Rate to such Monthly Cut-Off Date; and (iii) the aggregate
fair market value of each Foreclosure Property included in the Grantor Trust on
such Monthly Cut-Off Date, as determined by an Independent appraiser acceptable
to the Indenture Trustee as of a date not more than 30 days prior to such
Monthly Cut-Off Date.
TRANSACTION DOCUMENTS: The Custodial Agreement, the Home Loan
Purchase Agreements, the Indenture, this Agreement, the Grantor Trust Agreement,
the Owner Trust Agreement, the Administration Agreement and the Indemnification
and Contribution Agreements.
TRANSFEROR: Each of Empire Funding, ContiMortgage and ULG.
TREASURY REGULATIONS: Regulations, including proposed or temporary
regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
TRUST: The Issuer.
TRUST ACCOUNT PROPERTY: The Trust Accounts, all amounts and
investments held from time to time in the Trust Accounts and all proceeds of the
foregoing.
TRUST ACCOUNTS: The Note Payment Account, the Certificate
Distribution Account, the Collection Account and any escrow or reserve account
established pursuant to SECTIONS 4.05 (K) OR 10.01(B) hereof.
TRUST FEES AND EXPENSES: As of each Payment Date, an amount equal to
the Master Servicer Compensation (which includes the Master Servicer Fee), the
Servicing Compensation (which includes the Servicing Fee), the Empire
Subservicing Compensation (which includes the Empire Subservicing Fee), the
Indenture Trustee Fee, the Grantor Trustee Fee, the Owner Trustee Fee and the
Custodian Fee, if any.
UCC: The Uniform Commercial Code as in effect in the State of New
York.
ULG: California Lending Group, Inc., d/b/a United Lending Group, a
California corporation.
ULG HOME LOAN PURCHASE AGREEMENT: The Home Loan Purchase Agreement,
dated as of April 1, 1999, between ULG, the Depositor and the Guarantor.
ULG INDEMNIFICATION AND CONTRIBUTION AGREEMENT: The Indemnification
and Contribution Agreement, dated as of April 29, 1999, among the Depositor,
PaineWebber Incorporated, Bear, ▇▇▇▇▇▇▇ & Co. Inc., ULG and the Guarantor.
UNDERWRITERS: PaineWebber Incorporated and Bear, ▇▇▇▇▇▇▇ & Co. Inc.
Section 1.02 OTHER DEFINITIONAL PROVISIONS. (a) Capitalized terms
used herein and not otherwise defined herein have the meanings assigned to them
in the Indenture and the Owner Trust Agreement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under GAAP. To the extent that the definitions of accounting terms
in this Agreement or in any such certificate or other document are inconsistent
with the meanings of such terms under GAAP, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Article, Section, Schedule
and Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
CONVEYANCE OF THE GRANTOR TRUST CERTIFICATE
Section 2.01 CONVEYANCE OF THE GRANTOR TRUST CERTIFICATE. (a) As of
the Closing Date, in consideration of the Issuer's delivery of the Notes and the
Residual Interest Certificates to the Depositor or its designee, upon the order
of the Depositor, the Depositor, as of the Closing Date and concurrently with
the execution and delivery hereof, does hereby sell, transfer, assign, set over
and otherwise convey to the Issuer, without recourse, but subject to the other
terms and provisions of this Agreement, all of the right, title and interest of
the Depositor in and to the Owner Trust Estate. The foregoing sale, transfer,
assignment, set over and conveyance does not, and is not intended to, result in
a creation or an assumption by the Issuer of any obligation of the Depositor,
any Transferor or any other person in connection with the Owner Trust Estate or
under any agreement or instrument relating thereto except as specifically set
forth herein.
(b) As of the Closing Date, the Issuer acknowledges the conveyance
to it of the Owner Trust Estate, including all right, title and interest of the
Depositor in and to the Owner Trust Estate, receipt of which is hereby
acknowledged by the Issuer. Concurrently with such delivery and in exchange
therefor, the Issuer has pledged the Owner Trust Estate to the Indenture Trustee
for the benefit of the Noteholders, and the Indenture Trustee, pursuant to the
written instructions of the Issuer, has executed and caused the Notes to be
authenticated and delivered to the Depositor or its designee, upon the order of
the Issuer. In addition, concurrently with such delivery and in exchange
therefor, the Owner Trustee, pursuant to the instructions of the Depositor, has
executed (not in its individual capacity, but solely as Owner Trustee on behalf
of the Issuer) and caused the Residual Interest Certificates to be authenticated
and delivered to the Depositor or its designee, upon the order of the Depositor.
Section 2.02 OWNERSHIP AND POSSESSION OF GRANTOR TRUST CERTIFICATE.
Upon the issuance of the Notes, the ownership of the Grantor Trust Certificate
shall be vested in the Indenture Trustee for the benefit of the Securityholders.
Section 2.03 BOOKS AND RECORDS; PRINCIPAL PLACE OF BUSINESS. The
sale of the Grantor Trust Certificate shall be reflected on the balance sheets
and other financial statements of the Depositor, as a sale of assets by the
Depositor under GAAP.
It is the intention of the parties hereto that the transfers and
assignments contemplated by this Agreement shall constitute a sale of the
Grantor Trust Certificate and the other property specified in SECTION 2.01(A)
hereof from the Depositor to the Issuer and such property shall not be property
of the Depositor. If the assignment and transfer of the Grantor Trust
Certificate and the other property specified in SECTION 2.01(A) hereof to the
Owner Trustee pursuant to this Agreement or the conveyance of the Grantor Trust
Certificate or any of such other property to the Owner Trustee is held or deemed
not to be a sale or is held or deemed to be a pledge of security for a loan, the
Depositor intends that the rights and obligations of the parties shall be
established pursuant to the terms of this Agreement and that, in such event, (i)
the Depositor shall be deemed to have granted and does hereby grant to the Owner
Trustee a first priority security interest in the entire right, title and
interest of the Depositor in and to the Grantor Trust Certificate and all other
property conveyed to the Owner Trustee pursuant to SECTION 2.01 hereof and all
proceeds thereof and (ii) this Agreement shall constitute a security agreement
under applicable law. Within ten (10) days of the Closing Date, the Depositor
shall cause to be filed UCC-1 financing statements naming the Owner Trustee as
"secured parties" and describing the Grantor Trust Certificate being sold by the
Depositor to the Issuer with the office of the Secretary of State of the state
in which the Depositor is located.
Section 2.04 DELIVERY OF GRANTOR TRUST CERTIFICATE; FURTHER
ASSURANCES. (a) The Depositor shall, on the Closing Date, upon the order of the
Issuer, deliver or cause to be delivered, the Grantor Trust Certificate
registered in the name of U.S. Bank National Association, as Indenture Trustee,
to the Indenture Trustee for the benefit of the Noteholders.
(b) The Depositor shall execute and deliver all such other
instruments, documents and certificates and take all such other actions deemed
necessary by the Owner Trustee in connection with, or in furtherance of, the
transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS AND WARRANTIES OF THE Depositor. The
Depositor hereby represents and warrants to each Transferor, the Master
Servicer, the Servicer, Empire Subservicer, the Grantor Trustee, the Indenture
Trustee, the Owner Trustee and the Noteholders that as of the Closing Date:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has, and had at
all relevant times, full power to own its property, to carry on its business as
currently conducted, to enter into and perform its obligations under this
Agreement and to create the Owner Trust pursuant to the Owner Trust Agreement;
(b) The execution and delivery of this Agreement by the Depositor
and its performance of and compliance with the terms of this Agreement will not
violate the Depositor's certificate of incorporation or by-laws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach or acceleration of, any
material contract, agreement or other instrument to which the Depositor is a
party or which may be applicable to the Depositor or any of its assets;
(c) The Depositor has the full power and authority to enter into and
consummate the transactions contemplated by this Agreement, has duly authorized
the execution, delivery and performance of this Agreement and has duly executed
and delivered this Agreement. This Agreement, assuming due authorization,
execution and delivery by the Owner Trustee, the Indenture Trustee, the Grantor
Trustee, each Transferor, the Master Servicer, the Servicer, the Empire
Subservicer and the Guarantor constitutes a valid, legal and binding obligation
of the Depositor, enforceable against it in accordance with the terms hereof,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law);
(d) The Depositor is not in violation of, and the execution and
delivery of this Agreement by the Depositor and its performance and compliance
with the terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency having jurisdiction, which violation
would materially and adversely affect the condition (financial or otherwise) or
operations of the Depositor or its properties or materially and adversely affect
the performance of its duties hereunder;
(e) There are no actions or proceedings against, or investigations
of, the Depositor currently pending with regard to which the Depositor has
received service of process and no action or proceeding against, or
investigation of, the Depositor is, to the knowledge of the Depositor,
threatened or otherwise pending before any court, administrative agency or other
tribunal that (A) if determined adversely, would prohibit its entering into this
Agreement or render the Notes invalid, (B) seek to prevent the issuance of the
Notes or the consummation of any of the transactions contemplated by this
Agreement or (C) if determined adversely, would prohibit or materially and
adversely affect the performance by the Depositor of its obligations under, or
the validity or enforceability of, this Agreement or the Notes;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, this
Agreement or the Notes, or for the consummation of the transactions contemplated
by this Agreement, except for such consents, approvals, authorizations and
orders, if any, that have been obtained prior to the Closing Date;
(g) The Depositor is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business and its
obligations hereunder; it will not be rendered insolvent by the execution and
delivery of this Agreement or its obligations hereunder; no petition of
bankruptcy (or similar insolvency proceeding) has been filed by or against the
Depositor prior to the date hereof;
(h) The Depositor did not sell (i) the Home Loans to the Grantor
Trustee or (ii) the Grantor Trust Certificate to the Issuer, with any intent to
hinder, delay or defraud any of its creditors; the Depositor will not be
rendered insolvent as a result of the sale of the Home Loans to the Grantor
Trustee and the sale of the Grantor Trust Certificate to the Issuer;
(i) As of the Closing Date, the Depositor had good title to, and was
the sole beneficial owner of, the Grantor Trust Certificate and had good and
marketable title thereto, free and clear of any lien or options in favor of, or
claims of, any other Person, other than any such lien released simultaneously
with the sale contemplated herein, and, immediately upon each transfer and
assignment herein contemplated, the Depositor will have delivered to the Issuer
good title to, and the Issuer will be the sole beneficial owner of, the Grantor
Trust Certificate free and clear of any lien or options in favor of, or claims
of, any other Person;
(j) The Grantor Trust Certificate has been validly issued, and is
fully paid and non-assessable and not subject to preemptive rights, and the
Grantor Trust Certificate has been offered, issued and sold in compliance with
all applicable laws and (A) there are no outstanding rights, options, warrants
or agreements for the purchase from, or sale or issuance, in connection with the
Grantor Trust Certificate; (B) there are no agreements on the part of the
Depositor to issue, sell or distribute the Grantor Trust Certificate; and (C)
the Depositor has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any securities or any interest therein or to pay any dividend
or make any distribution in respect of the Grantor Trust Certificate;
(k) The Depositor acquired title to the Grantor Trust Certificate in
good faith, without notice of any adverse claim;
(l) No Officers' Certificate, statement, report or other document
prepared by the Depositor and furnished or to be furnished by it pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading; and
(m) The Depositor is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended.
Section 3.02 REPRESENTATIONS AND WARRANTIES OF EACH TRANSFEROR. Each
Transferor (unless otherwise indicated) hereby represents and warrants to the
Servicer, the Master Servicer, Empire Subservicer, the Indenture Trustee, the
Owner Trustee, the Grantor Trustee, the Noteholders, the other Transferors and
the Depositor that as of the Closing Date (except as otherwise specifically
provided herein):
(a) Such Transferor is a corporation licensed as a mortgage lender
duly organized, validly existing and in good standing under the laws of its
state of incorporation and has and had at all relevant times, full corporate
power to originate or purchase the Home Loans, to own its property, to carry on
its business as presently conducted and to enter into and perform its
obligations under the Transaction Documents to which it is a party;
(b) The execution and delivery of the Transaction Documents to which
such Transferor is a party and its performance of and compliance with the terms
of such Transaction Documents will not violate such Transferor's articles of
incorporation or by-laws or constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, or result in the
breach or acceleration of, any material contract, agreement or other instrument
to which such Transferor is a party or which may be applicable to such
Transferor or any of its assets;
(c) Such Transferor has the full power and authority to enter into
and consummate all transactions contemplated by the Transaction Documents to
which it is a party to be consummated by it, has duly authorized the execution,
delivery and performance of the Transaction Documents to which it is a party and
has duly executed and delivered such Transaction Documents. Such Transaction
Documents, assuming due authorization, execution and delivery by the other
parties thereto, constitute valid, legal and binding obligations of such
Transferor, enforceable against it in accordance with the terms hereof, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);
(d) Such Transferor is not in violation of, and the execution and
delivery by such Transferor of the Transaction Documents to which it is a party
and its performance and compliance with the terms thereof will not constitute a
violation with respect to, any order or decree of any court or any order or
regulation of any federal, state, municipal or governmental agency having
jurisdiction, which violation would materially and adversely affect the
condition (financial or otherwise) or operations of such Transferor or its
properties or materially and adversely affect the performance of its duties
hereunder;
(e) There are no actions or proceedings against, or investigations
of, such Transferor currently pending with regard to which such Transferor has
received service of process and no action or proceeding against, or
investigation of, such Transferor is, to the knowledge of such Transferor,
threatened or otherwise pending, before any court, administrative agency or
other tribunal that (A) if determined adversely, would prohibit its entering
into the Transaction Documents to which it is a party or render the Notes
invalid, (B) seek to prevent the issuance of the Notes or the consummation of
any of the transactions contemplated by the Transaction Documents to which it is
a party or (C) if determined adversely, would prohibit or materially and
adversely affect the sale of the Home Loans to the Depositor, the performance by
such Transferor of its obligations under, or the validity or enforceability of,
the Transaction Documents to which it is a party or the Notes;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for: (1) the execution, delivery and
performance by such Transferor of, or compliance by such Transferor with, the
Transaction Documents to which it is a party, (2) the issuance of the Notes, (3)
the sale of the Home Loans under the applicable Home Loan Purchase Agreement or
(4) the consummation of the transactions required of it by the Transaction
Documents to which it is a party, except such as shall have been obtained before
the Closing Date;
(g) Such Transferor acquired title to the Home Loans in good faith,
without notice of any adverse claim;
(h) The collection practices used by such Transferor with respect to
the Home Loans have been, in all material respects, legal, proper, prudent and
customary in the servicing of loans of the same type as the Home Loans;
(i) No Officer's Certificate, statement, report or other document
prepared by such Transferor and furnished or to be furnished by it pursuant to
the Transaction Documents to which it is a party or in connection with the
transactions contemplated hereby or thereby contains any untrue statement of
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading;
(j) Such Transferor is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business and its
obligations hereunder; it will not be rendered insolvent by the execution and
delivery of the Transaction Documents to which it is a party or by the
performance of its obligations thereunder; no petition of bankruptcy (or similar
insolvency proceeding) has been filed by or against such Transferor prior to the
date hereof;
(k) Empire Funding hereby represents and warrants that the
Prospectus Supplement does not contain an untrue statement of a material fact
and does not omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; PROVIDED, HOWEVER, that Empire Funding makes no statement with
respect to (i) the statements set forth in the final two paragraphs of the cover
of the Prospectus Supplement; (ii) statements set forth under the following
captions: (A) "SUMMARY--Tax Status," "--ERISA Considerations," and "--Legal
Investments," (B) FEDERAL INCOME TAX CONSEQUENCES," (C) ERISA CONSIDERATIONS,"
(D) "LEGAL INVESTMENT MATTERS," (E) "UNDERWRITING" (except for the last
paragraph thereunder), (F) "LEGAL MATTERS", and (G) "THE MASTER SERVICER"; and
(iii) ▇▇▇▇▇ Financial Information (as defined in the ContiMortgage
Indemnification and Contribution Agreement);
(l) ULG hereby represents and warrants that the ULG Information (as
that term is defined in the ULG Indemnification and Contribution Agreement)
contained in the Prospectus Supplement does not contain an untrue statement of a
material fact and does not omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(m) ContiMortgage hereby represents and warrants that the
ContiMortgage Information (as that term is defined in the ContiMortgage
Indemnification and Contribution Agreement) contained in the Prospectus
Supplement does not contain an untrue statement of a material fact and does not
omit to state a material act necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading;
(n) Such Transferor has transferred the Home Loans without any
intent to hinder, delay or defraud any of its creditors;
(o) Empire Funding hereby represents and warrants that the Private
Placement Memorandum does not contain an untrue statement of a material fact and
does not omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that Empire Funding makes no statement with respect to (i)
the statements set forth in the first sentence of the second paragraph
immediately preceding the final paragraph of the cover of the Private Placement
Memorandum and (ii) the statements under the following captions: "DESCRIPTION OF
THE OFFERED NOTES," "FEDERAL INCOME TAX CONSEQUENCES," "ERISA CONSIDERATIONS,"
"LEGAL INVESTMENT CONSIDERATIONS" and "PLAN OF OFFERING";
(p) ULG hereby represents and warrants that the ULG Information (as
that term is defined in the ULG Indemnification and Contribution Agreement)
contained in the Private Placement Memorandum does not contain an untrue
statement of a material fact and does not omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(q) ContiMortgage hereby represents and warrants that the
ContiMortgage Information (as that term is defined in the ContiMortgage
Indemnification and Contribution Agreement) contained in the Private Placement
Memorandum does not contain an untrue statement of a material fact and does not
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading;
(r) Such Transferor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of such Transferor or its properties or might have consequences that
would materially and adversely affect its performance hereunder;
(s) Such Transferor received fair consideration and reasonably
equivalent value in exchange for the sale of its Home Loans to the Depositor and
will treat such sale of such Home Loans as a sale for accounting purposes;
(t) The sale of each Home Loan by such Transferor shall be reflected
on the balance sheet and other financial statements of such Transferor, as a
sale of assets by such Transferor, under GAAP;
(u) Such Transferor shall not solicit any refinancing of any of the
Home Loans; PROVIDED, HOWEVER, that this covenant shall not prevent or restrict
either (1) such Transferor from making general solicitations, by mail,
advertisement or otherwise of the general public or persons on a targeted list,
so long as the list was not generated from the Home Loan Schedule or (2) any
refinancing in connection with an Obligor's unsolicited request for refinancing;
and
(v) Such Transferor shall not sell, transfer, assign or otherwise
dispose of a customer or similar list comprised of the names of the Obligors
under the Home Loans to any third party.
It is understood and agreed that the representations and warranties
set forth in this SECTION 3.02 shall survive delivery of the respective Grantor
Trustee's Home Loan Files to the Custodian (as the agent of the Grantor Trustee)
and shall inure to the benefit of the Securityholders, the Depositor, the Master
Servicer, the Servicer, Empire Subservicer, the Indenture Trustee, the Owner
Trustee, the Grantor Trustee, the Grantor Trust and the Owner Trust. Upon
discovery by any of the Transferors, the Depositor, the Master Servicer, the
Servicer, Empire Subservicer, the Indenture Trustee, the Grantor Trustee or the
Owner Trustee of a breach of any of the foregoing representations and warranties
that materially and adversely affects the value of any Home Loan or the
interests of the Grantor Trust Holder therein, the party discovering such breach
shall give prompt written notice (but in no event later than two Business Days
following such discovery) to the other parties. The obligations of each
Transferor set forth in SECTION 3.05 hereof shall constitute the sole remedies
available hereunder to the Securityholders, the Depositor, Empire Subservicer,
the Master Servicer, the Servicer, the Indenture Trustee, the Grantor Trustee or
the Owner Trustee respecting a breach of the representations and warranties
contained in this SECTION 3.02.
Section 3.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SERVICER. The Servicer hereby represents and warrants to and covenants with the
Owner Trustee, the Indenture Trustee, the Grantor Trustee, the Noteholders, the
Depositor, Empire Subservicer, the Master Servicer and each Transferor that as
of the Closing Date or as of such date specifically provided herein:
(a) The Servicer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is or will be
in compliance with the laws of each state in which any Property is located to
the extent necessary to perform its duties as Servicer hereunder and to ensure
the enforceability of each Home Loan in accordance with the terms of this
Agreement;
(b) The execution and delivery of this Agreement by the Servicer and
its performance of and compliance with the terms of this Agreement will not
violate the Servicer's articles of incorporation or by-laws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach or acceleration of, any
material contract, agreement or other instrument to which the Servicer is a
party or which may be applicable to the Servicer or any of its assets;
(c) The Servicer has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly authorized
the execution, delivery and performance of this Agreement and has duly executed
and delivered this Agreement. This Agreement, assuming due authorization,
execution and delivery by the Indenture Trustee, the Owner Trustee, the Grantor
Trustee, the Master Servicer, the Depositor, the Empire Subservicer and the
Guarantor constitutes a valid, legal and binding obligation of the Servicer,
enforceable against it in accordance with the terms hereof, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);
(d) The Servicer is not in violation of, and the execution and
delivery of this Agreement by the Servicer and its performance and compliance
with the terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency having jurisdiction, which violation
would materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or materially and adversely affect the performance of
its duties hereunder;
(e) There are no actions or proceedings against, or investigations
of, the Servicer currently pending with regard to which the Servicer has
received service of process and no action or proceeding against, or
investigation of, the Servicer is to the knowledge of the Servicer, threatened
or otherwise pending, before any court, administrative agency or other tribunal
that (A) if determined adversely, would prohibit its entering into this
Agreement or render the Notes invalid, (B) seek to prevent the issuance of the
Notes or the consummation of any of the transactions contemplated by this
Agreement or (C) if determined adversely, would prohibit or materially and
adversely affect the performance by the Servicer of its obligations under, or
the validity or enforceability of, this Agreement or the Notes;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement or the Notes, or for the consummation of the transactions contemplated
by this Agreement, except for such consents, approvals, authorizations and
orders, if any, that have been obtained prior to the Closing Date;
(g) The Servicer is duly licensed where required as a "Licensee" or
is otherwise authorized or qualified in each state in which it transacts
business and is not in default of such state's applicable licensing,
authorization or qualification laws, rules and regulations, except where the
failure to be so authorized or qualified or such default would not have a
material adverse effect on the ability of the Servicer to conduct its business
or perform its obligations hereunder;
(h) The Servicer is an Eligible Servicer and services mortgage loans
in accordance with Accepted Servicing Procedures;
(i) No Officer's Certificate, statement, report or other document
prepared by the Servicer and furnished or to be furnished by it pursuant to this
Agreement or in connection with the transactions contemplated hereby contains
any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading;
(j) The Servicer is solvent and will not be rendered insolvent as a
result of the performance of its obligations pursuant to this Agreement;
(k) With respect to any Mortgage or Manufactured Home Contract that
evidences a first lien on the related Property, the Servicer will cause to be
performed any and all acts required to be performed by the Servicer to preserve
the rights and remedies of the Grantor Trustee, the Owner Trustee and the
Indenture Trustee in any Insurance Policies applicable to the Home Loans
including, without limitation, in each case, any necessary notifications of
insurers, assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the Grantor
Trustee, the Owner Trustee and the Indenture Trustee;
(l) The Servicer shall comply with, and shall service, or cause to
be serviced, each Home Loan, in accordance with the Accepted Servicing
Procedures;
(m) The Servicer agrees that, so long as it shall continue to serve
in the capacity contemplated under the terms of this Agreement, it shall remain
in good standing under the laws governing its creation and existence and
authorized or qualified to transact business under the laws of each state in
which it is necessary to perform its obligations under this Agreement or in
which the nature of its business requires such authorization or qualification;
it shall maintain all licenses, permits and other approvals required by any law
or regulations as may be necessary to perform its obligations under this
Agreement and to retain all rights to service the Loans; and it shall not
dissolve or otherwise dispose of all or substantially all of its assets;
(n) The Servicer shall not solicit any refinancing of any of the
Home Loans; PROVIDED, HOWEVER, that this covenant shall not prevent or restrict
either (1) the Servicer from making general solicitations, by mail,
advertisement or otherwise of the general public or persons on a targeted list,
so long as the list was not generated from the Home Loan Schedule or (2) any
refinancing in connection with an Obligor's unsolicited request for refinancing;
and
(o) The Servicer shall not sell, transfer, assign or otherwise
dispose of a customer or similar list comprised of the names of the Obligors
under the Home Loans to any third party.
It is understood and agreed that the representations, warranties and
covenants set forth in this SECTION 3.03 shall survive delivery of the
respective Grantor Trustee's Home Loan Files to the Indenture Trustee and shall
inure to the benefit of the Depositor, the Noteholders, the Owner Trustee, the
Grantor Trustee, Empire Subservicer, the Master Servicer, and the Indenture
Trustee. Upon discovery by any of the Transferors, the Depositor, the Master
Servicer, Empire Subservicer, the Indenture Trustee, the Grantor Trustee or the
Owner Trustee of a breach of any of the foregoing representations, warranties
and covenants that materially and adversely affects the value of any Home Loan
or the interests of such Person therein, the party discovering such breach shall
give prompt written notice (but in no event later than two Business Days
following such discovery) to the other parties.
Section 3.03A REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
MASTER SERVICER. The Master Servicer hereby represents and warrants to the
Servicer, Empire Subservicer, the Indenture Trustee, the Owner Trustee, the
Grantor Trustee, the Noteholders and the Depositor that as of the Closing Date
(except as otherwise specifically provided herein):
(a) The Master Servicer is a national banking association duly
organized, validly existing, and in good standing under the laws of the United
States of America and has, and had at all relevant times, full power to own its
property, to carry on its business as presently conducted and to enter into and
perform its obligations under this Agreement.
(b) The execution and delivery of this Agreement by the Master
Servicer and its performance of and compliance with the terms of this Agreement
will not violate the Master Servicer's articles of association or by-laws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach or acceleration of,
any material contract, agreement or other instrument to which the Master
Servicer is a party or which may be applicable to the Master Servicer or any of
its assets.
(c) The Master Servicer has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement to be
consummated by it, has duly authorized the execution, delivery and performance
of this Agreement and has duly executed and delivered this Agreement. This
Agreement, assuming due authorization, execution and delivery by the Owner
Trustee, the Indenture Trustee, the Grantor Trustee, the Servicer, each
Transferor, the Depositor, the Empire Subservicer and the Guarantor constitutes
a valid, legal and binding obligation of the Master Servicer, enforceable
against it in accordance with the terms hereof, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, receivership, moratorium
or other similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
(d) The Master Servicer is not in violation of, and the execution
and delivery of this Agreement by the Master Servicer and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction, which
violation would materially and adversely affect the condition (financial or
otherwise) or operations of the Master Servicer or its properties or materially
and adversely affect the performance of its duties hereunder.
(e) There are no actions or proceedings against, or investigations
of, the Master Servicer currently pending with regard to which the Master
Servicer has received service of process and no action or proceeding against, or
investigation of, the Master Servicer is, to the knowledge of the Master
Servicer, threatened or otherwise pending, before any court, administrative
agency or other tribunal that (i) if determined adversely, would prohibit its
entering into this Agreement or render the Notes invalid, (ii) seek to prevent
the issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement or (iii) if determined adversely, would prohibit
or materially and adversely affect the sale of the Home Loans to the Depositor,
the performance by the Master Servicer of its obligations under, or the validity
or enforceability of, this Agreement or the Notes.
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for: (i) the execution, delivery and
performance by the Master Servicer of, or compliance by the Master Servicer
with, this Agreement or the Notes, or (ii) the consummation of the transactions
required of it by this Agreement, except such as shall have been obtained before
the Closing Date.
(g) No Officer's Certificate, statement, report or other document
prepared by the Master Servicer and furnished or to be furnished by it pursuant
to this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading.
(h) The statements set forth in the section of Prospectus Supplement
under the caption "THE MASTER SERVICER" do not contain an untrue statement of a
material fact and do not omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(i) The Master Servicer shall not solicit any refinancing of any of
the Home Loans; PROVIDED, HOWEVER, that this covenant shall not prevent or
restrict either (1) the Master Servicer from making general solicitations, by
mail, advertisement or otherwise of the general public or persons on a targeted
list, so long as the list was not generated from the Home Loan Schedule or (2)
any refinancing in connection with an Obligor's unsolicited request for
refinancing.
(j) The Master Servicer shall not sell, transfer, assign or
otherwise dispose of a customer or similar list comprised of the names of the
Obligors under the Home Loans to any third party.
It is understood and agreed that the representations, warranties and
covenants set forth in this SECTION 3.03A shall survive the execution and
delivery of the Agreement by the Master Servicer and shall inure to the benefit
of the Depositor, the Noteholders, the Owner Trustee, the Grantor Trustee, the
Servicer, Empire Subservicer, each Transferor and the Indenture Trustee. Upon
discovery by any of the Depositor, the Servicer, Empire Subservicer, any
Transferor, the Master Servicer, the Indenture Trustee, the Grantor Trustee or
the Owner Trustee of a breach of any of the foregoing representations,
warranties and covenants that materially and adversely affects the value of any
Home Loan or the interests of such Person therein, the party discovering such
breach shall give prompt written notice (but in no event later than two Business
Days following such discovery) to the other parties.
Section 3.03B REPRESENTATIONS, WARRANTIES AND COVENANTS OF EMPIRE
SUBSERVICER. Empire Subservicer hereby represents and warrants to and covenants
with the Owner Trustee, the Indenture Trustee, the Grantor Trustee, the
Noteholders, the Depositor, the Master Servicer, the Servicer and each
Transferor that as of the Closing Date or as of such date specifically provided
herein:
(a) Empire Subservicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Oklahoma and is or
will be in compliance with the laws of each state in which any Property is
located to the extent necessary to perform its duties as Empire Subservicer
hereunder and to ensure the enforceability of each Home Loan in accordance with
the terms of this Agreement;
(b) The execution and delivery of this Agreement by Empire
Subservicer and its performance of and compliance with the terms of this
Agreement will not violate Empire Subservicer's articles of incorporation or
by-laws or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in the breach or
acceleration of, any material contract, agreement or other instrument to which
Empire Subservicer is a party or which may be applicable to Empire Subservicer
or any of its assets;
(c) Empire Subservicer has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement and has
duly executed and delivered this Agreement. This Agreement, assuming due
authorization, execution and delivery by the Indenture Trustee, the Owner
Trustee, the Grantor Trustee, the Master Servicer, the Depositor, the Servicer
and the Guarantor constitutes a valid, legal and binding obligation of Empire
Subservicer, enforceable against it in accordance with the terms hereof, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);
(d) Empire Subservicer is not in violation of, and the execution and
delivery of this Agreement by Empire Subservicer and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction, which
violation would materially and adversely affect the condition (financial or
otherwise) or operations of Empire Subservicer or materially and adversely
affect the performance of its duties hereunder;
(e) There are no actions or proceedings against, or investigations
of, Empire Subservicer currently pending with regard to which Empire Subservicer
has received service of process and no action or proceeding against, or
investigation of, Empire Subservicer is to the knowledge of Empire Subservicer,
threatened or otherwise pending, before any court, administrative agency or
other tribunal that (A) if determined adversely, would prohibit its entering
into this Agreement or render the Notes invalid, (B) seek to prevent the
issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement or (C) if determined adversely, would prohibit or
materially and adversely affect the performance by Empire Subservicer of its
obligations under, or the validity or enforceability of, this Agreement or the
Notes;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Empire Subservicer of, or compliance by Empire Subservicer with,
this Agreement or the Notes, or for the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to the Closing
Date;
(g) Empire Subservicer is duly licensed where required as a
"Licensee" or is otherwise authorized or qualified in each state in which it
transacts business and is not in default of such state's applicable licensing,
authorization or qualification laws, rules and regulations, except where the
failure to be so authorized or qualified or such default would not have a
material adverse effect on the ability of the Servicer to conduct its business
or perform its obligations hereunder;
(h) Empire Subservicer is an Eligible Servicer and services mortgage
loans in accordance with Accepted Servicing Procedures;
(i) No Officer's Certificate, statement, report or other document
prepared by Empire Subservicer and furnished or to be furnished by it pursuant
to this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading;
(j) Empire Subservicer is solvent and will not be rendered insolvent
as a result of the performance of its obligations pursuant to this Agreement;
(k) With respect to any Mortgage or Manufactured Home Contract that
evidences a first lien on the related Property, Empire Subservicer will cause to
be performed any and all acts required to be performed by the Servicer to
preserve the rights and remedies of the Grantor Trustee, the Owner Trustee and
the Indenture Trustee in any Insurance Policies applicable to the Home Loans
including, without limitation, in each case, any necessary notifications of
insurers, assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the Grantor
Trustee, the Owner Trustee and the Indenture Trustee;
(l) Empire Subservicer shall comply with, and shall service, or
cause to be serviced, each Home Loan, in accordance with the Accepted Servicing
Procedures;
(m) Empire Subservicer agrees that, so long as it shall continue to
serve in the capacity contemplated under the terms of this Agreement, it shall
remain in good standing under the laws governing its creation and existence and
authorized or qualified to transact business under the laws of each state in
which it is necessary to perform its obligations under this Agreement or in
which the nature of its business requires such authorization or qualification;
it shall maintain all licenses, permits and other approvals required by any law
or regulations as may be necessary to perform its obligations under this
Agreement and to retain all rights to service the Loans; and it shall not
dissolve or otherwise dispose of all or substantially all of its assets;
(n) Empire Subservicer shall not solicit any refinancing of any of
the Home Loans; provided, however, that this covenant shall not prevent or
restrict either (1) Empire Subservicer from making general solicitations, by
mail, advertisement or otherwise of the general public or persons on a targeted
list, so long as the list was not generated from the Home Loan Schedule or (2)
any refinancing in connection with an Obligor's unsolicited request for
refinancing; and
(o) Empire Subservicer shall not sell, transfer, assign or otherwise
dispose of a customer or similar list comprised of the names of the Obligors
under the Home Loans to any third party.
It is understood and agreed that the representations, warranties and
covenants set forth in this SECTION 3.03B shall survive delivery of the
respective Grantor Trustee's Home Loan Files to the Indenture Trustee and shall
inure to the benefit of the Depositor, the Noteholders, the Owner Trustee, the
Grantor Trustee, the Master Servicer, the Servicer and the Indenture Trustee.
Upon discovery by any of the Transferors, the Depositor, the Master Servicer,
the Servicer, Empire Subservicer, the Indenture Trustee, the Grantor Trustee or
the Owner Trustee of a breach of any of the foregoing representations,
warranties and covenants that materially and adversely affects the value of any
Home Loan or the interests of such Person therein, the party discovering such
breach shall give prompt written notice (but in no event later than two Business
Days following such discovery) to the other parties.
Section 3.04 REPRESENTATIONS AND WARRANTIES REGARDING INDIVIDUAL
HOME LOANS. As of the Closing Date, except as otherwise expressly stated, each
Transferor hereby represents and warrants to each other Transferor, the
Depositor, the Issuer, the Servicer, Empire Subservicer, the Indenture Trustee,
the Grantor Trustee, the Owner Trustee, the Master Servicer and the Noteholders,
with respect to each Home Loan for which it is designated as the Transferor on
the Home Loan Schedule:
(a) LOAN INFORMATION. The information pertaining to each Home Loan
set forth in the Home Loan Schedule was true and correct in all material
respects as of the Cut-Off Date.
(b) PAYMENTS CURRENT; NO TRANSFEROR ADVANCES OR Payments. As of the
applicable Cut-Off Date, except for the Home Loans set forth on Exhibit D (such
delinquent Home Loans, the "INITIAL DELINQUENT LOANS") attached hereto, none of
the Home Loans was 30 or more days past due (without giving effect to any grace
period); such Transferor has not advanced funds, induced, solicited or knowingly
received any advance of funds from a party other than the Obligor, directly or
indirectly, for the payment of any amount required by any Home Loan and there is
no obligation on the part of such Transferor or any other party other than the
Obligor to make payments with respect to the Home Loan and the Obligor is not
entitled to any refund of any amounts paid or due to the lender pursuant to the
Debt Instrument or any related Mortgage or Manufactured Home Contract.
(c) NO WAIVER OR MODIFICATION. The terms of the Debt Instrument and
any related Mortgage or Manufactured Home Contract contain the entire agreement
of the parties thereto and have not been impaired, waived, altered or modified
in any respect, EXCEPT (i) with respect to the delinquency of an Initial
Delinquent Loan; (ii) by written instruments reflected in the related Grantor
Trustee's Home Loan File and recorded, if necessary, to maintain the lien
priority of the any related Mortgage or Manufactured Home Contract; or (iii) in
connection with an assumption agreement which assumption agreement is part of
the related Grantor Trustee's Home Loan File and the payment terms of which are
reflected in the related Home Loan Schedule, and to the extent required by the
applicable title insurance policy for any Mortgaged Property secured by a first
lien Mortgage at origination, the substance of any waiver, alteration or
modification has been approved by the applicable title insurer and its terms are
reflected in the related Home Loan Schedule. No Obligor has been released, in
whole or in part from the Debt Instrument and any related Mortgage or
Manufactured Home Contract.
(d) NO DEFENSES. The Debt Instrument and any related Mortgage or
Manufactured Home Contract are not subject to any set-off, claims, counterclaim
or defense, including the defense of usury or of fraud in the inducement, and
will not be so subject in the future with respect to any goods and services
provided under the Debt Instrument; and neither the operation of any of the
terms of the Debt Instrument and any related Mortgage or Manufactured Home
Contract, nor the exercise of any right thereunder, will render such Debt
Instrument or any such Mortgage or Manufactured Home Contract unenforceable, in
whole or in part, or subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto.
(e) COMPLIANCE WITH LAWS. Any and all requirements of any federal,
state or local law applicable to the Home Loan (including, without limitation,
any usury, truth-in-lending, real estate settlement procedures, consumer
protection, equal credit opportunity, environmental and any other law applicable
to the origination, servicing and collection practices with respect thereto)
have been complied with. With respect to each Home Loan that is a "mortgage" as
such term is defined in 15 U.S.C. 1602(aa) (the "▇▇▇▇▇▇ ACT"), no Obligor has or
will have a claim or defense under the ▇▇▇▇▇▇ Act with respect to such Home
Loan. No fraud or misrepresentation was committed by any Person in connection
with the origination and servicing of such Home Loan.
(f) NO SATISFACTION OR RELEASE OF LIEN. No Debt Instrument or any
related Mortgage or Manufactured Home Contract has been satisfied, canceled,
rescinded or subordinated, in whole or part; and the applicable Transferor,
except as otherwise permitted by clause (c) of this SECTION 3.04, has not waived
the performance by the Obligor of any action, if the Obligor's failure to
perform such action would cause the Debt Instrument or Home Loan to be in
default; and, any related Property has not been released from the lien of any
related Mortgage or Manufactured Home Contract, in whole or in part, nor has any
instrument been executed that would effect any such satisfaction, subordination,
release, cancellation or rescission.
(g) VALID LIEN. Any related Mortgage is a valid, subsisting and
enforceable lien on any related Mortgaged Property, including the land and all
buildings on any such Mortgaged Property. Any related Manufactured Home Contract
creates a valid, subsisting and enforceable lien on any related Manufactured
Home.
(h) VALIDITY AND ENFORCEABILITY OF LOAN DOCUMENTS. The Debt
Instrument and any related Mortgage or Manufactured Home Contract (i) are
genuine and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights in general and by general principles of equity and
(ii) contain customary and enforceable provisions so as to render the rights and
remedies of the holder thereof adequate for the realization against any related
Mortgaged Property of the benefits of the security provided thereby, including,
(A) in the case of any related Mortgage designated as a deed of trust, by
trustee's sale, and (B) otherwise by judicial foreclosure. There are no
proceedings pending, or to the applicable Transferor's knowledge, threatened,
wherein the Obligor or any governmental agency has alleged that any Home Loan is
illegal or unenforceable.
(i) CAPACITY OF PARTIES. To the best of such Transferor's knowledge,
all parties to the Debt Instrument and any related Mortgage or Manufactured Home
Contract had legal capacity at the time to enter into the Home Loan and to
execute and deliver the Debt Instrument and any related Mortgage or Manufactured
Home Contract, and the Debt Instrument and any related Mortgage or Manufactured
Home Contract have been duly and properly executed by such parties.
(j) FULL DISBURSEMENT OF PROCEEDS. As of the applicable Cut-Off
Date, the proceeds of the Home Loan have been fully disbursed and there is no
requirement for future advances thereunder, and any and all requirements
applicable to the disbursement of proceeds set forth in the Home Loan documents
have been complied with; the Obligor is not entitled to any refund of any
amounts paid or due under the Debt Instrument or any related Mortgage or
Manufactured Home Contract.
(k) OWNERSHIP BY TRANSFEROR. Immediately prior to the sale, transfer
and assignment to the Depositor, such Transferor will have good and indefeasible
legal title to the Home Loan, the related Debt Instrument and any related
Mortgage or Manufactured Home Contract and the full right to transfer such Home
Loan, the related Debt Instrument and any related Mortgage or Manufactured Home
Contract, and such Transferor will have been the sole owner thereof, subject to
no liens, pledges, charges, mortgages, encumbrances or rights of others, except
for such liens as will be released simultaneously with the transfer and
assignment of the Home Loans to the Depositor (and the Grantor Trustee's Home
Loan File will contain no evidence inconsistent with the foregoing); and
immediately upon the sale, transfer and assignment contemplated by the Home Loan
Purchase Agreement, the Depositor will hold good and indefeasible legal title
to, and be the sole owner of each Home Loan, the related Debt Instrument and any
related Mortgage or Manufactured Home Contract, free of all liens, pledges,
charges, mortgages, encumbrances or rights of others.
(l) NO DEFAULTS. Except for the Initial Delinquent Loans, there is
no default, breach, violation or event of acceleration known to such Transferor
under the Home Loan, the related Debt Instrument and any related Mortgage or
Manufactured Home Contract and there is no event known to such Transferor which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of acceleration
thereunder and neither the applicable Transferor nor its predecessors have
waived any such default, breach, violation or event of acceleration.
(m) INTEREST, TERM AND AMORTIZATION. Each Home Loan is a fixed rate
loan; the Debt Instrument shall mature within not more than 30 years from the
date of origination of the Home Loan; the Debt Instrument is payable in
substantially equal Monthly Payments, with interest payable in arrears, and
(except as set forth on Exhibit D hereto) requires a Monthly Payment which is
sufficient to fully amortize the original principal balance over the original
term and to pay interest at the related Home Loan Interest Rate; interest on
each Home Loan is calculated on the basis of a 360-day year consisting of twelve
30-day months, and the Debt Instrument does not provide for any extension of the
original term.
(n) SECURITY. The related Debt Instrument is not and has not been
secured by any collateral except, the lien of any related Mortgage or
Manufactured Home Contract.
(o) DEED OF TRUST. If any related Mortgage constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in any such Mortgage,
or a valid substitution of trustee has been recorded, and no extraordinary fees
or expenses are or will become payable to the trustee under the deed of trust,
except in connection with default proceedings and a trustee's sale after default
by the Obligor.
(p) VALUE AND MARKETABILITY. Such Transferor has no knowledge of any
circumstances or conditions not reflected in the representations set forth
herein, or in the Home Loan Schedule, or in the related Grantor Trustee's Home
Loan File with respect to any related Mortgage or Manufactured Home Contract,
related Property or the Obligor which could reasonably be expected to materially
and adversely affect the value of any such Property or the marketability of the
Home Loan or cause the Home Loan to become delinquent or otherwise be in
default.
(q) LOAN DOCUMENTS AND DELIVERY OF LOAN FILE. There exists a Home
Loan File relating to each Home Loan and such Home Loan File contains all of the
original or certified documentation listed in SECTION 2.04 hereof for such Home
Loan. Each Grantor Trustee's Home Loan File has been delivered to the applicable
Custodian and each Servicer's Home Loan File is being held in trust by the
Servicer for the benefit of, and as agent for, the Grantor Trust Holder and the
Grantor Trustee as their respective interest appear herein. Each document
included in the Home Loan File, which is required to be executed by the Obligor,
has been executed by the Obligor in the appropriate places. With respect to each
Home Loan, any related Assignment of Mortgage to the Grantor Trustee is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the related Mortgaged Property is located. All blanks on
any form required to be completed have been so completed.
(r) MORTGAGED PROPERTY. Any related Mortgaged Property is improved
by a residential dwelling and not a manufactured home or mobile home or the land
on which a manufactured home or mobile home has been placed, unless such
manufactured home or mobile home is treated as real estate under applicable law.
In the aggregate, no more than 1.0% of the Home Loans secured by Mortgaged
Properties (as calculated on the basis of the Original Pool Principal Balance)
are secured by manufactured homes or mobile homes.
(s) UNDERWRITING AND ORIGINATION. Each Home Loan (other than a
Manufactured Home Loan) was (i) underwritten or re-underwritten in accordance
with such Transferor's underwriting guidelines by such Transferor or another
lender that has been granted "delegated underwriting authority" by such
Transferor (EXCEPT for any Home Loans acquired through such Transferor's
portfolio acquisition program, which have been reviewed on a sample basis for
compliance with the originating seller's underwriting guidelines), (ii)
originated by such Transferor or through such Transferor's network of brokers,
dealers and correspondents (including Home Loans acquired by such
correspondents) or through such Transferor's portfolio acquisition program, and
(iii) originated no earlier than August 1996.
(t) FLOOD AND HAZARD INSURANCE. To the best of such Transferor's
knowledge, if any related Property securing any Home Loan is in an area
identified by the Federal Emergency Management Agency ("FEMA") as having special
flood hazards, unless the community in which the area is situated is not
participating in the National Flood Insurance Program and the regulations
thereunder or less than a year has passed since FEMA notification regarding such
hazards, a flood insurance policy is in effect with respect to any related
Property with a generally acceptable carrier which complies with section 102(a)
of the Flood Disaster Protection Act of 1968, as amended. With respect to each
Home Loan that is secured by a first lien priority Mortgage at origination or a
Manufactured Home Loan, all improvements upon any related Property securing a
Home Loan are insured by a generally acceptable insurer against loss by fire,
hazards of extended coverage and such other hazards as are customary in the area
where any such Property is located and such insurance policies satisfy the
applicable requirements of the Federal Housing Administration and conform to the
requirements of the FNMA Seller's Guide and FNMA Servicer's Guide, and such
Transferor has caused to be performed or shall cause to be performed within a
reasonable time following the Closing Date any and all acts required to preserve
the rights and remedies of the Servicer, on behalf of the Grantor Trustee, in
any such hazard insurance or flood insurance policies applicable to any such
Properties, including without limitation any necessary notifications of
insurers, assignments of policies or interests therein, and establishment of
co-insured, joint loss payee and mortgagee rights in favor of the Servicer, on
behalf of the Grantor Trustee.
(u) SUPERIOR LIEN. At the time of origination of the Home Loan, each
related Superior Lien, if any, was certified by the Obligor or verified by the
applicable Superior Lien lender as not being 30 or more days delinquent.
(v) LICENSING AND QUALIFICATION. To the best of such Transferor's
knowledge, each party which had any interest as an owner or servicer of the Home
Loan, whether as mortgagee, assignee, or servicer, is (or, during the period in
which they held and disposed of such interest, was) (i) in compliance with any
and all applicable licensing requirements of the laws of the state wherein any
related Property is located, and (ii) either (A) organized under the laws of
such state, or (B) authorized or qualified to do business in such state, or (C)
a federal savings and loan association or a national bank having principal
offices in such state, or (D) not doing business in such state.
(w) ASSUMPTION. Any related Mortgage or Manufactured Home Contract
contains an enforceable provision requiring the acceleration of the payment of
the unpaid principal balance in the event that the related Property is sold or
transferred without the consent of the mortgagee.
(x) NO HOMESTEAD OR RELIEF ACT. There is no homestead or other
exemption available to the mortgagor which would materially interfere with the
right to sell any related Mortgaged Property at a trustee's sale or the right to
foreclose any related Mortgage; no relief has been requested or allowed to the
Obligor under the Soldiers' and Sailors' Civil Relief Act of 1940.
(y) OWNERSHIP OF PROPERTY. The related Servicer's Home Loan File for
each Home Loan secured by a Property contains (i) a title document with respect
to such Home Loan reflecting that title to any related Property is vested at
least 50% in the related Obligor or (ii) with respect to any Home Loan secured
by a Mortgaged Property, a lease agreement with an attorney's opinion letter
with respect to such Home Loan reflecting that the leasehold in a ground lease
which is included as part of the Mortgaged Property is vested at least 50% in
the related Obligor.
(z) NO CONDEMNATION OR DAMAGE. To the best of such Transferor's
knowledge, each related Property (including each residential dwelling
improvement thereon) is free of damage which materially and adversely affects
the value thereof and there is no proceeding pending for the total or partial
condemnation of any such Property.
(aa) NO BULK TRANSFER OR ADVERSE SELECTION. The transfer, assignment
and conveyance of the Debt Instruments and the related Mortgages or Manufactured
Home Contracts by such Transferor to the Depositor were not subject to the bulk
transfer laws or any similar statutory provisions in effect in any applicable
jurisdiction; other than the Initial Delinquent Loans, no Home Loan was
adversely selected as to credit risk from the pool of home loans owned by such
Transferor.
(bb) NO CURRENT BANKRUPTCY. As of the applicable Cut-Off Date, no
Obligor is a debtor under proceedings under the United States Bankruptcy Code,
and no Obligor has defaulted in payments on a Home Loan after the filing of such
bankruptcy case, whether under a plan or reorganization or otherwise.
(cc) ENVIRONMENTAL COMPLIANCE. To the best of such Transferor's
knowledge, any related Property is free from any and all toxic and hazardous
substances and there exists no violation of any environmental law, rule or
regulation (whether local, state or federal) in respect of any such Property
which violation has or could have a material adverse effect on the market value
of such Property. Such Transferor has no knowledge of any pending action or
proceeding directly involving any related Property in which compliance with any
environmental law, rule or regulation is in issue; and, to such Transferor's
best knowledge, nothing further remains to be done to satisfy in full all
requirements of each such law, rule or regulation constituting a prerequisite to
the use and enjoyment of such Property.
(dd) NO TAXABLE MORTGAGE POOL. The Transferors collectively hereby
represent and warrant that with respect to all of the Home Loans, on the Closing
Date, 55% or more (by aggregate Principal Balance) of the Home Loans do not
constitute "real estate mortgages" for the purpose of Treasury Regulations
Section 301.7701(i). For this purpose, a Home Loan does not constitute a "real
estate mortgage" if:
(i) The Home Loan is not secured by an interest in real
property, or
(ii) The Home Loan is not an "obligation principally secured
by an interest in real property." For this purpose an "obligation is
principally secured by an interest in real property," if it satisfies
either test set out in paragraph (A) or paragraph (B) below.
(A) The 80-percent test. An obligation is principally
secured by an interest in real property if the fair market value of
the interest in real property securing the obligation (1) was at
least equal to 80 percent of the adjusted issue price of the
obligation at the time the obligation was originated (or, if later,
the time the obligation was significantly modified); or (2) is at
least equal to 80 percent of the adjusted issue price of the
obligation on the Closing Date. For purposes of this paragraph (A),
the fair market value of the real property interest must be first
reduced by the amount of any lien on the real property interest that
is senior to the obligation being tested, and must be further
reduced by a proportionate amount of any lien that is in parity with
the obligation being tested, in each case before the percentages set
forth in (A)(1) and (A)(2) are determined. The adjusted issue price
of an obligation is its issue price plus the amount of accrued
original issue discount, if any, as of the date of determination.
(B) Alternative test. An obligation is principally
secured by an interest in real property if substantially all of the
proceeds of the obligation were used to acquire or to improve or
protect an interest in real property that, at the origination date,
is the only security for the obligation. For purposes of this test,
loan guarantees made by the United States or any state (or any
political subdivision, agency, or instrumentality of the United
States or of any state), or other third party credit enhancement are
not viewed as additional security for a loan. An obligation is not
considered to be secured by property other than real property solely
because the obligor is personally liable on the obligation. For this
purpose only, substantially all of the proceeds of the obligations
means 66 2/3% or more of the gross proceeds.
(ee) CONSENT OF SUPERIOR LIEN. With respect to each Home Loan that
is not a first lien mortgage loan, either (i) no consent for the Home Loan was
required by the holder of the related Superior Lien or (ii) such consent has
been obtained and has been delivered to the Indenture Trustee.
(ff) LOAN TYPES; OWNER OCCUPIED PROPERTIES. Each Home Loan is a
Combination Loan, a Debt Consolidation Loan, a home equity loan or a Manufacture
Home Loan and at the time of its origination no Home Loan was secured by a
Mortgage or Manufactured Home Contract, as applicable, on a non-owner occupied
Property.
(gg) DEBT INSTRUMENT. Each Debt Instrument is comprised of an
original promissory note and each promissory note constitutes an "instrument" or
"chattel paper" for purposes of Article 9 of the UCC; each Debt Instrument has
been delivered to the Custodian.
(hh) NO ENCROACHMENT. To the best of such Transferor's knowledge,
all improvements which were considered in determining the appraised value of any
related Property lay wholly within the boundaries and building restriction lines
of any such Property and no improvements on adjoining properties encroach upon
any such Property. No improvement located on or being part of the Property is in
violation of any applicable zoning law or regulation.
(ii) ENFORCEMENT AGAINST ORIGINATOR. If the Home Loan was originated
by an entity (such entity, the "ORIGINATOR") other than such Transferor or an
affiliate of such Transferor, then the Grantor Trustee and the Indenture Trustee
may enforce any remedies for breach of representations and warranties made by
such Transferor with respect to such Home Loan.
(jj) NO BUYDOWN OR GPM LOANS. The Home Loan does not contain
provisions pursuant to which Monthly Payments are paid or partially paid with
funds deposited in any separate account established by such Transferor, the
Obligor or anyone on behalf of the Obligor, or paid by any source other than the
Obligor, nor does it contain any other similar provisions currently in effect
which may constitute a "buydown" provision. The Home Loan is not a graduated
payment Home Loan and the Home Loan does not have a shared appreciation or other
contingent interest feature.
(kk) NO TAX OR MECHANICS LIENS. With respect to any related
Property, at origination there were no liens against such Property for
delinquent taxes and there were no mechanics' or similar liens or claims which
had been filed for work, labor or material (and to such Transferor's knowledge,
no rights were outstanding which could have given rise to such liens) affecting
such Property, which were or may be liens prior to, or equal or coordinate with,
the lien of the related Mortgage or Manufactured Home Contract, as applicable.
(ll) CONFORMITY TO PROSPECTUS SUPPLEMENT AND PRIVATE PLACEMENT
MEMORANDUM. Each Home Loan conforms, and the Home Loans in the aggregate
conform, in all material respects to the applicable description thereof set
forth in the Prospectus Supplement and the Private Placement Memorandum. The
computer data, from which the Home Loans being acquired by the Issuer on the
Closing Date were selected, was made available to the accountants of such
Transferor who are providing the comfort letter to the Underwriters in
connection with information contained in the Prospectus Supplement and the
Private Placement Memorandum regarding the Home Loan Pool; and such data was
complete and accurate as of its date and with respect to its intended use and
includes a description of the same Home Loans that are included on the Home Loan
Schedule, including the Principal Balances thereof as of the Cut-Off Date.
(mm) MANUFACTURED HOME LOANS. Empire Funding hereby represents and
warrants that as of the Cut-Off Date, the Home Loan Pool includes 27
Manufactured Home Loans with an aggregate Principal Balance equal to
$780,672.25.
(nn) CURRENT SERVICING. Each Home Loan is being serviced by Empire
Subservicer.
(oo) NO TRANSFER TAXES. The sale, transfer, assignment and
conveyance of the Home Loans by such Transferor pursuant to the relevant Home
Loan Purchase Agreement is not subject to and will not result in any
governmental tax, fee or charge payable by such Transferor, the Depositor or the
Grantor Trustee to any federal, state or local government ("TAXES"), other than
any Taxes which have or will be paid by such Transferor as due. If such
Transferor receives notice of any Taxes arising out of the sale, transfer,
assignment and conveyance of the Home Loans, such Transferor shall pay all such
Taxes (It being understood that the Securityholders, the Grantor Trustee, and
the Indenture Trustee shall not have any obligation to pay such Taxes).
(pp) NO PRIOR DEFAULT. No Home Loan is due from an Obligor who has
defaulted under a previous loan in which such Transferor was lender thereunder
or acting as the servicer thereof at the time of such default.
(qq) FTC HOLDER REGULATIONS. With respect to each Home Loan that is
subject to the FTC regulation contained in 16 C.F.R. Part 433 (the "FTC HOLDER
REGULATION"), no Obligor has or will have a claim or defense with respect to
goods or services provided under the FTC Holder Regulation with respect to such
Home Loan.
(rr) REVIEW OF LOAN DOCUMENTS. Such Transferor has reviewed all of
the documents constituting the Home Loan File and has made such inquiries, as it
deems reasonable under the circumstances to make and confirm the accuracy of the
representations set forth herein.
(ss) MANUFACTURED HOMES. With respect to any Manufactured
Home Loan, Empire Funding hereby represents:
(i) VALID SECURITY INTEREST. The Manufactured Home Contract
relating to any Manufactured Home Loan, together with any related security
interest, creates a valid, subsisting and enforceable first-priority
security interest in favor of such Transferor in the Manufactured Home
covered thereby; such security interest has been assigned by the
Transferor to the Depositor, and upon the assignment by the Depositor to
the Grantor Trust, the Grantor Trust will have a valid and perfected
first-priority security interest in such Manufactured Home.
(ii) NOT REAL ESTATE. The related Manufactured Home is
personal property and is not considered or classified as part of the real
estate on which it is located under the laws of the jurisdiction in which
it is located and was personal property and was not considered or
classified as part of the real estate on which it was located under the
laws of the jurisdiction in which it was located at the time the
Manufactured Home Contract relating to the Manufactured Home Loan was
executed by the parties thereto, and such Manufactured Home is, to the
best of such Transferor's knowledge, free of damage and in good repair.
(iii) NOTATION OF SECURITY INTEREST. If the related
Manufactured Home is located in a state in which notation of a security
interest on the title document is required or permitted to perfect such
security interest, the title document shows, or, if a new or replacement
title document with respect to such Manufactured Home is being applied
for, such title document will be issued within 180 days and will show,
such Transferor as the holder of a first-priority security interest in
such Manufactured Home. If the related Manufactured Home is located in a
state in which the filing of a financing statement or the making of a
fixture filing under the UCC is required to perfect a security interest in
manufactured housing, such filings have been duly made and show the
Transferor as secured party. In each case, the Grantor Trust and the
Grantor Trustee have the same rights as the secured party of record would
have (if such secured party were still the owner of the Manufactured Home
Loan) against all Persons claiming an interest in such Manufactured Home.
(iv) Each Manufactured Home Loan was originated by Empire
Funding in conformity with guidelines that were generally consistent with
industry guidelines for similar loans at the time of origination.
Section 3.05 PURCHASE AND SUBSTITUTION. (a) REPURCHASE AND
SUBSTITUTION OF DEFECTIVE HOME LOANS. It is understood and agreed that the
representations and warranties set forth in SECTION 3.02 and SECTION 3.04 hereof
shall survive the conveyance of the Home Loans from each Transferor to the
Depositor and from the Depositor to the Grantor Trustee, the conveyance of the
Grantor Trust Certificate to the Issuer, the pledge of the Grantor Trust
Certificate to the Indenture Trustee and the delivery of the Notes to the
Noteholders. Upon discovery by the Depositor, the Master Servicer, the Servicer,
Empire Subservicer, any Transferor, any Custodian, the Issuer, the Indenture
Trustee, the Grantor Trustee, the Owner Trustee or any Securityholder of a
breach of any of the representations and warranties set forth in SECTION 3.02
and SECTION 3.04 which materially and adversely affects the value of the Home
Loans or the interests of the Grantor Trustee, the Owner Trustee or the
Indenture Trustee in the related Home Loan (notwithstanding that such
representation and warranty was made to the applicable Transferor's best
knowledge), the party discovering such breach shall give prompt written notice
to the others. The applicable Transferor shall within 60 days of the earlier of
its discovery or its receipt of notice of any breach of a representation or
warranty, including any breach of the representation and warranty set forth in
SECTION 3.04(DD) hereof regarding No Taxable Mortgage Pool as a result of an
aggregate of Home Loans which would not otherwise cause a breach of any other
representation or warranty, promptly cure such breach in all material respects.
If within 60 days after the earlier of the applicable Transferor's discovery of
such breach or the applicable Transferor's receiving notice thereof such breach
has not been remedied by such Transferor and such breach materially and
adversely affects the interests of the Grantor Trustee, the Owner Trustee or the
Indenture Trustee in, or the value of, the related Home Loan (the "DEFECTIVE
HOME LOAN"), such Transferor shall on or before the Determination Date next
succeeding the end of such 60-day period either (i) if no more than two years
have passed since the Closing Date, remove such Defective Home Loan from the
Grantor Trust (in which case it shall become a Deleted Home Loan) and substitute
one or more Qualified Substitute Home Loans in the manner and subject to the
conditions set forth in this SECTION 3.05 or (ii) purchase such Defective Home
Loan at a purchase price equal to the Purchase Price by depositing such Purchase
Price in the Collection Account. In the event of a breach of the representation
and warranty set forth in SECTION 3.04(DD), the Transferors shall repurchase the
fewest number of Home Loans sufficient (a) to cause the remaining Home Loans to
be in compliance with SECTION 3.04(DD) and (b) to cause each Transferor to
repurchase its approximate pro rata share of such repurchased Home Loans (based
on the relative aggregate principal balance of Home Loans sold by each
Transferor to the Depositor as of the Cut-Off Date). Such Transferor shall
provide the Master Servicer, the Servicer, Empire Subservicer, the Indenture
Trustee, the Grantor Trustee and the Owner Trustee with a certification of a
Responsible Officer on the Determination Date next succeeding the end of such
60-day period indicating whether such Transferor is purchasing the Defective
Home Loan or substituting in lieu of such Defective Home Loan a Qualified
Substitute Home Loan.
Any substitution of Home Loans pursuant to this SECTION 3.05(A)
shall be accompanied by payment by the applicable Transferor of the Substitution
Adjustment, if any, to be deposited in the Collection Account. For purposes of
calculating the Available Collection Amount for any Payment Date, amounts paid
by applicable Transferor pursuant to this SECTION 3.05 in connection with the
repurchase or substitution of any Defective Home Loan that are on deposit in the
Collection Account as of the Determination Date for such Payment Date shall be
deemed to have been paid during the related Due Period and shall be transferred
to the Note Payment Account as part of the Available Collection Amount to be
retained therein or transferred to the Certificate Distribution Account, if
applicable, pursuant to SECTION 5.01(C) hereof.
In addition to such cure, repurchase or substitution obligation, the
applicable Transferor shall indemnify the Issuer, the Depositor, the Servicer,
the Master Servicer, Empire Subservicer, the Indenture Trustee, the Grantor
Trustee and the Securityholders against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and other costs and expenses resulting from any claim, demand, defense or
assertion based on or grounded upon, or resulting from, a breach by such
Transferor of any of it representations and warranties contained in SECTION 3.02
and SECTION 3.04.
The Guarantor hereby acknowledges that as a result of entering into
this Agreement and the consummation of the transactions contemplated hereby,
ContiMortgage and ULG, both of which are wholly-owned subsidiaries of the
Guarantor, stand to derive substantial benefits which will thereby benefit the
Guarantor. In consideration of the foregoing, and to induce the Issuer, the
Depositor, Empire Funding, the Master Servicer and the Indenture Trustee to
enter into this Agreement and the transactions contemplated hereby, the
Guarantor, for the benefit of the Issuer, the Grantor Trust and the Indenture
Trustee on behalf of the Noteholders, agrees that in the event of any failure
for any reason (including, without limitation, a bankruptcy or insolvency of
ContiMortgage or ULG), whether in whole or in part, of either ContiMortgage or
ULG to satisfy its obligations (after the expiration of any applicable cure
period) pursuant to this SECTION 3.05(A), and upon receipt of notice from any of
the Issuer, the Depositor, the Master Servicer, the Indenture Trustee or the
Servicer regarding such failure, the Guarantor will promptly perform such
obligations (including, without limitation, any obligation to indemnify pursuant
to the immediately preceding paragraph) in accordance with this SECTION 3.05(A)
and at the direction of the Indenture Trustee; PROVIDED, HOWEVER, that if either
of ContiMortgage or ULG has not effected either a cure, substitution or
repurchase with respect to a Defective Home Loan in accordance with the terms of
this SECTION 3.05(A), then on the Business Day following the Determination Date
next succeeding the end of the applicable 60-day period with respect to such
Defective Home Loan, the Guarantor shall have the obligation to repurchase such
Defective Home Loan at the Purchase Price, such repurchase to be effected on the
Business Day following receipt of notice from any of the Issuer, the Depositor,
the Master Servicer, the Indenture Trustee or the Servicer of such obligation
and otherwise in accordance with the procedures set forth in this SECTION
3.05(a).
(b) REPURCHASE OF DEFAULTED HOME LOANS. In addition to the preceding
repurchase obligations, each of the Transferors and the Servicer shall have the
option, exercisable in its sole discretion at any time, to repurchase from the
Grantor Trustee any Defaulted Home Loan (in which case such Defaulted Home Loan
shall become a Deleted Home Loan); PROVIDED, HOWEVER, that any such repurchase
of a Defaulted Home Loan pursuant to this Subsection shall be conducted in the
same manner as the repurchase of a Defective Home Loan pursuant to this SECTION
3.05.
(c) SUBSTITUTIONS. No Transferor may effect a substitution with
respect to a Defective Home Loan more than two years after the Closing Date. As
to any Deleted Home Loan for which the applicable Transferor substitutes a
Qualified Substitute Home Loan or Loans, such Transferor shall effect such
substitution by delivering to the Indenture Trustee, the Master Servicer, the
Servicer and Grantor Trustee (i) a certification executed by a Responsible
Officer of such Transferor to the effect that the Substitution Adjustment has
been credited to the Collection Account and (ii) the documents constituting the
Grantor Trustee's Home Loan File for such Qualified Substitute Home Loan or
Loans.
The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Home Loan or Loans after
the date of such substitution. Monthly Payments received with respect to
Qualified Substitute Home Loans on or before the date of substitution will be
retained by the applicable Transferor. The Grantor Trustee will be entitled to
all payments received on the Deleted Home Loan on or before the date of
substitution and the applicable Transferor shall thereafter be entitled to
retain all amounts subsequently received in respect of such Deleted Home Loan.
The applicable Transferor shall give written notice to the Grantor Trustee, the
Master Servicer, Empire Subservicer, the Servicer (if the applicable Transferor
is not then acting as such), the Indenture Trustee and Owner Trustee that such
substitution has taken place and the Servicer shall amend the Home Loan Schedule
pursuant to Subsection (g) below. Upon such substitution, such Qualified
Substitute Home Loan or Loans shall be subject to the terms of this Agreement in
all respects, and the applicable Transferor shall be deemed to have made with
respect to such Qualified Substitute Home Loan or Loans, as of the date of
substitution, the covenants, representations and warranties set forth in SECTION
3.02 and SECTION 3.04 hereof. On the date of such substitution, the applicable
Transferor will deposit into the Collection Account an amount equal to the
related Substitution Adjustment, if any.
(d) REASSIGNMENT OF DEFECTIVE HOME LOANS. With respect to all
Defective Home Loans or other Home Loans repurchased by any Transferor pursuant
to this Agreement, upon the deposit of the Purchase Price therefor into the
Collection Account, the Grantor Trustee shall assign to the applicable
Transferor, without recourse, representation or warranty, all the Grantor
Trustee's right, title and interest in and to such Defective Home Loans or other
Home Loans, which right, title and interest were conveyed to the Grantor Trustee
pursuant to the Grantor Trust Agreement. The Grantor Trustee shall take any
actions as shall be reasonably requested by such Transferor to effect the
repurchase of any such Home Loans.
(e) SOLE REMEDIES AGAINST TRANSFEROR. It is understood and agreed
that the obligations of each Transferor to cure or to repurchase or substitute
any such Home Loan, and to indemnify for any breach of any representation or
warranty with respect thereto, pursuant to this SECTION 3.05 shall constitute
the sole remedies against each of them with respect to such breach of the
foregoing representations or warranties or the existence of the foregoing
conditions; PROVIDED, that, the Depositor shall be entitled to pursue any remedy
available against a Transferor pursuant to the Home Loan Purchase Agreements.
Any cause of action against any Transferor relating to or arising out of a
defect in a Grantor Trustee's Home Loan File as contemplated by SECTION 2.06 of
the Grantor Trust Agreement or against any Transferor relating to or arising out
of a breach of any representations and warranties made in SECTION 3.02 and
SECTION 3.04 hereof shall accrue as to any Home Loan upon (i) discovery of such
defect or breach by any party and notice thereof to the applicable Transferor or
notice thereof by the applicable Transferor to the Indenture Trustee, (ii)
failure by any such Transferor to cure such defect or breach or purchase or
substitute such Home Loan as specified above, and (iii) demand upon such
Transferor, as applicable, by the Grantor Trustee or the Grantor Trust Holder
for all amounts payable in respect of such Home Loan.
(f) NO DUTY TO INVESTIGATE. Neither the Depositor, the Grantor
Trustee, the Owner Trustee, the Master Servicer nor the Indenture Trustee shall
have any duty to conduct any affirmative investigation other than as
specifically set forth in this Agreement as to the occurrence of any condition
requiring the repurchase or substitution of any Home Loan pursuant to this
Section or the eligibility of any Home Loan for purposes of this Agreement.
(g) AMENDMENT OF HOME LOAN SCHEDULE. In connection with a repurchase
or substitution of any Home Loan pursuant to this SECTION 3.05, the Servicer
shall amend the Home Loan Schedule to reflect (i) the removal of the applicable
Deleted Home Loan from the terms of this Agreement, and (ii) if applicable, the
substitution of the applicable Qualified Substitute Home Loan. In connection
with its monthly reporting here under, the Servicer shall deliver a copy of the
amended Home Loan Schedule to the Master Servicer, the Grantor Trustee, the
Indenture Trustee and each Transferor who is not then acting as the Servicer.
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE HOME LOANS
Section 4.01 DUTIES OF THE SERVICER.
(a) SERVICING STANDARD. The Servicer, as an independent contractor,
shall manage, service, administer and make collections on the Home Loans and
shall have full power and authority, acting alone, to do any and all things in
connection with such servicing and administration which the Servicer may deem
necessary or desirable and consistent with the terms of this Agreement and the
Accepted Servicing Procedures. Notwithstanding anything to the contrary
contained herein, the Servicer, in servicing and administering the Home Loans,
shall employ or cause to be employed procedures (including collection,
modification, foreclosure and liquidation procedures) that conform to the
Accepted Servicing Procedures. In performing its obligations hereunder the
Servicer shall at all times act in good faith and in a commercially reasonable
manner. The Servicer shall provide to the Obligors any reports and statements
that are required by applicable state or federal law. The Servicer has and shall
maintain the facilities, procedures and experienced personnel that are
reasonably necessary to comply with the servicing standard set forth in this
SECTION 4.01(A) and the duties of the Servicer set forth in this Agreement
relating to the servicing and administration of the Home Loans.
(b) SERVICING ADVANCES. In accordance with the preceding general
servicing standard, the Servicer, or any Subservicer on behalf of the Servicer,
shall make all Servicing Advances in connection with the servicing of each Home
Loan hereunder. Notwithstanding any provision to the contrary herein, neither
the Servicer nor any Subservicer on behalf of the Servicer shall have any
obligation to advance its own funds (i) for any delinquent scheduled payments of
principal and interest on any Home Loan, (ii) to cure, keep current or, in
connection with any proceeding against the related Property, satisfy the
indebtedness secured by any Superior Liens on such Property. No costs incurred
by the Servicer or any Subservicer in respect of Servicing Advances shall, for
the purposes of distributions in respect of the Grantor Trust Certificate to
Securityholders, be added to the amount owing under the related Home Loan.
Notwithstanding any obligation by the Servicer to make a Servicing Advance
hereunder with respect to a Home Loan, the Servicer shall make a Servicing
Advance for such Home Loan, if the Servicer, in good faith, determines there is
a reasonable likelihood of (i) recovering such Servicing Advance, together with
any expected future Servicing Advances and any prior Servicing Advances for such
Home Loan, and (ii) recovering an economically significant amount attributable
to the outstanding interest and principal owing on such Home Loan for the
benefit of the Securityholders in excess of the costs and expenses to obtain
such recovery, including without limitation any Servicing Advances therefor and,
if applicable, the outstanding indebtedness of all Superior Liens. Pursuant to
this Agreement the Servicer will be entitled to be reimbursed for any Servicing
Advances, plus any accrued interest thereon from the date of such advance to the
date of reimbursement and at the rate equal to the Servicer's cost of funds,
including any Nonrecoverable Servicing Advance pursuant to SECTION 5.01(C)
hereof.
(c) WAIVERS, MODIFICATIONS AND EXTENSIONS; Subordination. In
accordance with the servicing standard in SECTION 4.01(A), the Servicer shall
collect all payments called for under the terms and provisions of the Home
Loans. The Servicer in its discretion may waive or permit to be waived any
penalty interest or any other fee or charge which the Servicer would be entitled
to retain hereunder as servicing compensation and extend the Due Date on a Debt
Instrument for a period (with respect to each payment as to which the Due Date
is extended) not greater than 90 days after the initially scheduled Due Date for
such payment. Notwithstanding anything in this Agreement to the contrary, the
Servicer shall not permit any additional extension or modification with respect
to any Home Loan other than that permitted by the immediately preceding
sentence, unless the Home Loan is a Defaulted Home Loan. (See SECTION 4.10
hereof for a description of the recovery procedures for Defaulted Home Loans.)
The Servicer may in its discretion enter in subordination agreements with
respect to any Home Loan, PROVIDED that the Servicer determines, consistent with
this Agreement and the Accepted Servicing Procedures, that the entering into of
such subordination agreement is in the best interests of the Grantor Trust. The
Servicer may grant a waiver or enter into a subordination agreement with respect
to the refinancing of the indebtedness secured by a Superior Lien on the related
Property, PROVIDED that the Obligor is in a better financial or cash flow
position as a result of such refinancing, which may include a reduction in the
Obligor's scheduled monthly payment on the indebtedness secured by such Superior
Lien or the conversion of an adjustable rate loan into a new fixed rate loan.
The Servicer shall notify the Master Servicer, the Grantor Trustee and the
Indenture Trustee of any modification, waiver or amendment of any provision of
any Home Loan and the date thereof, and shall deliver to the applicable
Custodian for deposit in the related Grantor Trustee's Home Loan File, a true
and correct copy or, if available, an original of the agreement relating to such
modification, waiver or amendment promptly following the execution thereof.
(d) INSTRUMENTS OF SATISFACTION OR RELEASE. Without limiting the
generality of SECTION 4.01(C), the Servicer, in its own name or in the name of a
Subservicer, is hereby authorized and empowered, when the Servicer believes it
appropriate in its best judgment, to execute and deliver, on behalf of the
Grantor Trust Holder and the Grantor Trustee or any of them, and upon notice to
the Grantor Trustee, any and all instruments of satisfaction or cancellation or
of partial or full release or discharge, and all other comparable instruments
with respect to the Home Loans and the Properties and to institute foreclosure
proceedings or obtain a deed in lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Grantor Trustee and the Grantor Trust Holder,
subject to SECTION 4.10(F) hereof.
(e) POWERS OF ATTORNEY. The Grantor Trustee shall execute, at the
written direction of the Servicer, the Master Servicer or any Subservicer, any
limited or special powers of attorney and other documents reasonably acceptable
to the Grantor Trustee to enable the Servicer, the Master Servicer or any
Subservicer to carry out their servicing and administrative duties hereunder,
including, without limitation, limited or special powers of attorney with
respect to any Foreclosure Property, and the Grantor Trustee shall not be
accountable for the actions of the Servicer, the Master Servicer or any
Subservicers under such powers of attorney and shall be indemnified by such
parties with respect to such actions.
Section 4.02 APPOINTMENT AND DUTIES OF THE MASTER SERVICER.
(a) APPOINTMENT AND COMPENSATION OF MASTER SERVICER. The Issuer, the
Securityholders and the Indenture Trustee hereby assign and appoint the Master
Servicer to act as the Master Servicer for the Home Loans (including all of the
duties, obligations and rights of the Master Servicer) under this Agreement. The
Master Servicer hereby accepts its appointment as the Master Servicer hereunder.
The Master Servicer shall not consent to any material amendment, modification or
waiver of the servicing provisions of this Agreement, without the consent of the
Indenture Trustee.
As compensation for its services hereunder, the Master Servicer
shall be entitled to receive from the Note Payment Account the Master Servicer
Fee. In addition to the Master Servicer Fee, additional compensation
attributable to the investment earnings from the Note Payment Account shall be
part of the Master Servicer Compensation payable to the Master Servicer pursuant
to SECTION 5.01(C) hereof. The Master Servicer shall be required to pay all
expenses incurred by it in connection with its Master Servicer duties and
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided for herein.
(b) MASTER SERVICER ASSUMES SERVICING RESPONSIBILITY. If a Servicer
Termination Event occurs, then the Master Servicer shall be obligated (1) to
select a successor servicer subject to SECTION 4.07 hereof, that is reasonably
acceptable to the Indenture Trustee, or (2) to act as the successor servicer
hereunder.
(c) MONITORING OF SERVICING. The Master Servicer shall: (i) review
the servicing reports, loan level information or other relevant information
prepared by the Servicer and any Subservicer (including Empire Subservicer) (A)
to determine whether such reports are inaccurate or incomplete, in any material
respect, (B) to ascertain whether each of the Servicer and Empire Subservicer is
in compliance, in all material respects, with its duties and obligations with
respect to such reports under this Agreement and (C) in the event that any
servicing report is inaccurate or incomplete, to prepare and deliver an
exception report to the Indenture Trustee, the Grantor Trustee, the Servicer and
the Rating Agencies, which describes such inaccuracy or incompleteness; (ii)
otherwise monitor the performance by each of the Servicer and Empire Subservicer
of its duties and obligations hereunder and notify the Indenture Trustee, the
Grantor Trustee, and the Rating Agencies of any Event of Default of which it has
received notice or has actual knowledge; and (iii) be obligated to verify that
the Servicer or Empire Subservicer, as applicable, has or has caused to be
deposited all payments and proceeds required to be deposited into the Collection
Account pursuant to SECTION 5.01(B)(I) hereof. On the 19th calendar day of each
month (or the next Business Day, if the 19th is not a Business Day), the Master
Servicer shall provide the Indenture Trustee with an Officer's Certificate to
the effect that the Master Servicer has performed its obligations under this
Subsection 4.02(c) with respect to the servicing information for such month.
(d) SUCCESSOR SERVICER. The Master Servicer agrees that it shall at
all times be prepared, to perform the duties and obligations of the Servicer and
become the successor servicer (including, without limitation, the performance of
Empire Subservicer's duties hereunder, if required), if the Servicer fails to
perform its duties and obligations hereunder.
(e) SERVICER TERMINATION. At the direction of the Master Servicer or
the Majority Noteholders, the Indenture Trustee, on behalf of the Issuer and the
Securityholders, shall terminate the Servicer upon the occurrence and
continuance of an Event of Default pursuant to ARTICLE X hereof.
(f) SERVICER COOPERATION. The Servicer and Empire Subservicer shall
act, in a good faith and reasonable manner, to assist and cooperate with the
Master Servicer in performing its duties and obligations under this SECTION
4.02. On a monthly basis pursuant to SECTION 6.01 hereof, the Servicer, or if
Empire Subservicer is acting as Subservicer, Empire Subservicer, shall provide
the Master Servicer with its Servicer's Monthly Remittance Report in a
compatible computer readable format.
(g) RESIGNATION OF MASTER SERVICER. The Master Servicer may not
resign as Master Servicer hereunder unless (i) the Master Servicer obtains the
consent of the Majority Residual Interestholders and the Indenture Trustee and
obtains written confirmation from each Rating Agency that such resignation will
not cause a downgrade, withdrawal or qualification of the then current ratings
on the Notes or (ii) the Master Servicer determines that its duties hereunder
are no longer permissible under applicable law or are in material conflict by
reason of applicable law with any other activities carried on by it and cannot
be cured, PROVIDED that such determination shall be evidenced by an Opinion of
Counsel (which shall be Independent) to such effect delivered to the Grantor
Trustee and the Indenture Trustee. No resignation of the Master Servicer shall
become effective until a successor master servicer reasonably acceptable to the
Indenture Trustee shall have assumed the obligations of the Master Servicer
hereunder.
(h) LIMITATION ON LIABILITY OF MASTER SERVICER. Neither the Master
Servicer nor any director, officer, employee or agent of the Master Servicer
shall be under any liability to the Grantor Trustee, the Indenture Trustee, the
Servicer, the Noteholders or any other Person for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; PROVIDED, HOWEVER, that this provision
shall not protect the Master Servicer or any such Person against any liability
that would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in its performance of its duties or by reason of reckless disregard
for its obligations and duties under this Agreement. The Master Servicer and any
director, officer, employee or agent of the Master Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder.
Section 4.03 FIDELITY BOND; ERRORS AND OMISSIONS INSURANCE. The
Servicer shall maintain with a responsible company, and at its own expense, a
blanket fidelity bond and an errors and omissions insurance policy in such
amounts as required by, and satisfying any other requirements of, the Federal
Housing Administration and the FHLMC, with broad coverage on all officers,
employees or other persons acting in any capacity requiring such persons to
handle funds, money, documents or papers relating to the Home Loans ("SERVICER
EMPLOYEES"). Any such fidelity bond and errors and omissions insurance shall
protect and insure the Servicer against losses, including losses resulting from
forgery, theft, embezzlement, fraud, errors and omissions and negligent acts
(including acts relating to the origination and servicing of loans of the same
type as the Home Loans) of such Servicer Employees. Such fidelity bond shall
also protect and insure the Servicer against losses in connection with the
release or satisfaction of a Home Loan without having obtained payment in full
of the indebtedness secured thereby. In the event of any loss of principal or
interest on a Home Loan for which reimbursement is received from the Servicer's
fidelity bond or errors and omissions insurance, the proceeds from any such
insurance will be deposited in the Collection Account. No provision of this
SECTION 4.03 requiring such fidelity bond and errors and omissions insurance
shall diminish or relieve the Servicer from its duties and obligations as set
forth in this Agreement. Upon the request of the Master Servicer, the Grantor
Trustee or the Indenture Trustee, the Servicer shall deliver to the requesting
party a certified true copy of such fidelity bond and insurance policy.
Section 4.04 FILING OF CONTINUATION STATEMENTS. On or before the
fifth anniversary of the filing of any financing statements by the Transferors
and the Depositor, respectively, with respect to the assets conveyed to the
Grantor Trustee or to the Owner Trust, Empire Subservicer, or, if Empire
Subservicer is no longer the Subservicer hereunder, the Servicer shall prepare,
have executed by the necessary parties and file in the proper jurisdictions at
its expense, all financing and continuation statements necessary to maintain the
liens, security interests and priorities of such liens and security interests
that have been granted by the applicable Transferor and the Depositor,
respectively. Empire Subservicer, or, if Empire Subservicer is no longer the
Subservicer hereunder, the Servicer shall continue to file on or before each
fifth anniversary of the filing of any financing and continuation statements
such additional financing and continuation statements until the Owner Trust and
Grantor Trust have terminated pursuant to SECTION 9.1 of the Owner Trust
Agreement and SECTION 7.01 of the Grantor Trust Agreement, respectively. The
Indenture Trustee and Grantor Trustee agree to cooperate with Empire
Subservicer, or, if Empire Subservicer is no longer the Subservicer hereunder,
the Servicer in preparing, executing and filing such statements. The Indenture
Trustee and Grantor Trustee agree to notify Empire Subservicer, or, if Empire
Subservicer is no longer the Subservicer hereunder, the Servicer on the third
Payment Date prior to each such fifth anniversary of the requirement that they
file such financing and continuation statements. The filing of any such
statement shall not be construed as any indication of an intent of any party
contrary to the expressed intent set forth in SECTION 2.03 hereof and SECTION
2.04 of the Grantor Trust Agreement. If any Transferor or the Depositor has
ceased to do business whenever any such financing and continuation statements
must be filed or Empire Subservicer or the Servicer, as applicable, fail to file
any such financing statements or continuation statements at least one month
prior to the expiration thereof, each of the Transferors and the Depositor does
hereby make, constitute and appoint the Grantor Trustee its attorney-in-fact,
with full power and authority, to execute and file in its name and on its behalf
any such financing statements or continuation statements required under this
SECTION 4.04 relating to assets conveyed to the Grantor Trustee and the
Depositor does hereby make, constitute and appoint the Indenture Trustee its
attorney-in-fact, with full power and authority, to execute and file in its name
and on its behalf any such financing statements or continuation statements
required under this SECTION 4.04 relating to assets conveyed to the Owner Trust.
Section 4.05 APPOINTMENT OF EMPIRE FUNDING AS SUBSERVICER.
(A) APPOINTMENT. The Issuer, the Securityholders and the Indenture
Trustee hereby assign and appoint Empire Funding to act as Subservicer for the
Home Loans under this Agreement. As such, Empire Subservicer shall perform the
servicing and administration obligations required to be performed by the
Servicer with respect to the Home Loans under this Agreement. Empire Subservicer
hereby agrees to perform and be bound by all of the servicing and administration
obligations and entitled to all of the rights of the Servicer for the Home Loans
in accordance with this Agreement and the other Transaction Documents under
which it has responsibilities, except for those servicing and administration
rights and obligations of the Servicer set forth in this Agreement under SECTION
3.03 ("REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SERVICER"); SECTION 4.06
("SUBSERVICING"); SECTION 7.03 ("SERVICING COMPENSATION"); SECTION 9.01
("INDEMNIFICATION; THIRD PARTY CLAIMS"); SECTION 9.04 ("SERVICER NOT TO RESIGN;
ASSIGNMENT"); ARTICLE X ("DEFAULT"); ARTICLE XI ("TERMINATION"); and SECTION
12.02 ("AMENDMENT"), which shall be performed by or accrue to the benefit of (as
applicable) the Servicer. Solely for purposes of this SECTION 4.05 and the
performance of the servicing and administration obligations in this Agreement by
Empire Subservicer, all references to the "SERVICER" in the applicable
provisions in this Agreement relating to the servicing and administration of the
Home Loans (except for SECTION 4.06, ARTICLE XI; and SECTION 12.02), shall be
deemed to refer to Empire Subservicer, and all references to the Indenture
Trustee in the applicable provisions hereunder relating to the servicing and
administration of the Home Loans shall be deemed to refer to the Servicer as an
additional or co-trustee; PROVIDED that solely for purposes of this SECTION
4.05, the Servicer shall have the rights and authority granted to the Indenture
Trustee with respect to the Servicer, but shall not have the obligations and
duties of the Indenture Trustee under this Agreement. The provisions of SECTION
4.06 ("Subservicing") shall not apply to Empire Subservicer.
(b) COMPENSATION. As compensation for its services hereunder, Empire
Subservicer shall be entitled to receive the Empire Subservicing Fee (which
shall be an expense of the Grantor Trust). If Empire Funding is the Subservicer,
additional subservicing compensation that is otherwise payable to the Servicer
pursuant to SECTION 7.03 hereof in the form of assumption fees, two-thirds of
the prepayment penalties (the other one-third being payable to the Servicer
pursuant to SECTION 7.03 hereof), modification fees, and other administrative
fees, insufficient funds charges, amounts remitted pursuant to SECTION 7.01
hereof and late payment charges shall be payable to Empire Subservicer (and not
to the Servicer) as part of the Subservicing Compensation payable to Empire
Subservicer hereunder and shall be paid either by Empire Subservicer retaining
such additional servicing compensation prior to deposit in the Collection
Account pursuant to SECTION 5.01(B)(I) hereof or, if deposited in the Collection
Account, as part of the Subservicing Compensation withdrawn from the Note
Payment Account pursuant to SECTION 5.01(C)(I) hereof. In addition, if Empire
Subservicer is the Subservicer, additional subservicing compensation
attributable to the investment earnings from the Collection Account shall be
part of the Empire Subservicer Compensation payable to the Empire Subservicer
pursuant to SECTION 5.01(C)(I) hereof.
Empire Subservicer shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder and shall not be
entitled to reimbursement therefor except as specifically provided for herein.
(c) RESIGNATION. Empire Subservicer shall not resign from the
obligations and duties hereby imposed on it, except upon determination that the
duties of Empire Subservicer hereunder are no longer permissible under
applicable law. Any such determination permitting the resignation of Empire
Subservicer shall be evidenced by an Independent Opinion of Counsel to Empire
Subservicer to such effect, which Opinion of Counsel shall be at the expense of
Empire Subservicer and shall be delivered to the Servicer and the Master
Servicer.
(d) MERGER OR CONSOLIDATION OF EMPIRE SUBSERVICER. Any Person into
which Empire Subservicer may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which Empire
Subservicer shall be a party, or any Person succeeding to the business of Empire
Subservicer, shall be an Eligible Servicer and shall be the successor of Empire
Subservicer hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. Empire Subservicer shall send notice of any such
merger, conversion, consolidation or succession to the Servicer, the Master
Servicer, the Grantor Trustee and the Indenture Trustee.
(e) ASSIGNMENT. Empire Subservicer may not assign or transfer its
rights or obligations under this Agreement without the prior written consent of
the other parties hereto. Notwithstanding the preceding sentence, Empire
Subservicer in its sole judgment shall have the authority and right to delegate
specific servicing obligations hereunder to, including without limitation,
computer bureaus, credit bureaus, real estate tax service companies, real estate
brokers, or agents, attorneys, trustees and any other determined by Empire
Subservicer; PROVIDED that Empire Subservicer remains responsible for any such
action taken or not taken by such companies, agents, representatives throughout
the term of this Agreement.
(f) LOAN INFORMATION.
(i) MONTHLY REPORTING. Empire Subservicer shall provide the
Master Servicer and the Servicer with a copy of the "Servicer's Monthly
Remittance Report" or equivalent monthly servicing report required under
this Agreement at the same time such report is delivered to the Indenture
Trustee.
(ii) LOAN DATA TAPE. On the 15th calendar day of each month,
and if such day is not a Business Day, the next succeeding Business Day,
and no later than two (2) Business Days following any request by the
Servicer, Empire Subservicer shall deliver to the Servicer, the Indenture
Trustee, the Rating Agencies (if so requested), a certain financial market
publisher (which initially shall be Bloomberg, L.P.) and to the Master
Servicer, a computer tape in ASCII file format that includes the "loan
level" information with respect to the Home Loans as of the end of the
related Due Period for the loan data fields of Subservicer as reasonably
required by the Master Servicer from time to time; PROVIDED that Empire
Subservicer shall use its best efforts to furnish sufficient loan level
information that will enable the Servicer and the Master Servicer, or its
designee, to reconcile information provided by Empire Subservicer in the
Servicer's Monthly Remittance Report.
(iii) BOOKS AND RECORDS. Empire Subservicer shall maintain
appropriate books and records of information relating to the servicing and
administration of the Home Loans under this Agreement. Empire Subservicer
shall permit the examination and review its books and records in
accordance with SECTION 7.06 hereof.
(g) EMPIRE SUBSERVICER EVENTS OF DEFAULT. In case one or more of the
following shall occur (each an "EMPIRE SUBSERVICER EVENT OF DEFAULT") and be
continuing, that is to say:
(i) any failure by Empire Subservicer to deposit in the
Collection Account in accordance with SECTION 5.01(B) hereof any payments
in respect of the Home Loans received by Empire Subservicer no later than
the first Business Day following the day on which such payments were
received; or
(ii) failure by Empire Subservicer duly to observe or perform,
in any material respect, any other covenants, obligations or agreements of
Empire Subservicer as set forth in this Agreement, which failure continues
unremedied for a period of 30 days after the date on which written notice
of such failure, requiring the same to be remedied and stating that such
notice is a "Notice of Default" hereunder, shall have been given (a) to
Empire Subservicer by the Servicer, the Indenture Trustee, the Master
Servicer, the Grantor Trustee or the Issuer, or (b) to Empire Subservicer,
the Servicer, the Indenture Trustee, the Master Servicer, the Grantor
Trustee or the Issuer by the Majority Noteholders; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against Empire
Subservicer and such decree or order shall have remained in force,
undischarged or unstayed for a period of 60 days; or
(iv) Empire Subservicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings of or
relating to Empire Subservicer or of or relating to all or substantially
all of Empire Subservicer's property; or
(v) Empire Subservicer shall admit in writing its inability to
pay its debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(vi) the Majority Noteholders, the Master Servicer, the
Servicer or the Grantor Trust Holder shall determine, in its reasonable
judgment and based upon published reports (including wire services), which
it reasonably believes in good faith to be reliable, that:
(A) Empire Subservicer has experienced a material
adverse change in its business, assets, liabilities, operations,
condition (financial or otherwise) or prospects,
(B) Empire Subservicer or its parent has defaulted
on any of its material obligations,
(C) Empire Subservicer is no longer able to discharge
its duties under this Agreement, or
(D) Empire Subservicer has ceased to conduct its
business in the ordinary course,
PROVIDED, HOWEVER, that Empire Subservicer shall have five Business Days
from the receipt of any notice of default under this Subsection to cure
such Empire Subservicer Event of Default by providing the foregoing
parties with written assurances that, in a reasonable and good faith
manner, substantiate the financial and operational well-being of Empire
Subservicer and adequately refute the occurrence of a material adverse
change, including, without limitation, information, reports or written
assurances obtained from certain of its lenders, or
(vii) as of any Determination Date, the total Expected Loan
Loss Percentage (as defined below) exceeds (1) up to the fifth (5th)
anniversary of the March 31, 1999 Cut-Off Date, 22.0%, or (2) thereafter
33.0% (where the "EXPECTED LOAN LOSS PERCENTAGE" shall be the sum of (A)
the cumulative Net Loan Losses divided by the Original Pool Principal
Balance, plus (B) 25% of the aggregate Principal Balance of the Home Loans
which are then more than 30 but less than 60 days delinquent divided by
the Original Pool Principal Balance, plus (C) 50% of the aggregate
Principal Balance of the Home Loans which are then more than 60 but less
than 90 days delinquent divided by the Original Pool Principal Balance,
plus (D) 100% of the aggregate Principal Balance of the Home Loans which
are then more than 90 days delinquent divided by the Original Pool
Principal Balance);
then, and in each and every such case, so long as an Empire Subservicer Event of
Default shall not have been remedied, the Indenture Trustee, the Grantor
Trustee, the Master Servicer, the Servicer, the Grantor Trust Holder or the
Majority Noteholders, by notice in writing to Empire Subservicer may, in
addition to whatever rights such Person may have at law or in equity to damages,
including injunctive relief and specific performance, terminate all the rights
and obligations of Empire Subservicer under this Agreement and in and to the
Home Loans and the proceeds thereof, as Subservicer under this Agreement without
payment of any termination fee or penalty to Empire Subservicer.
(h) SERVICER TERMINATION OPTION. Except as otherwise specifically
set forth herein, the obligations and responsibilities of Empire Subservicer
shall terminate without payment of any termination fee or penalty at the
Servicer's option and upon ninety (90) days' prior written notice to Empire
Subservicer, on the fifth anniversary of this Agreement and, at the Servicer's
option and upon ninety (90) days' prior written notice to Empire Subservicer, on
each annual anniversary thereafter; provided, however, that the Servicer may
only terminate Empire Subservicer if (i) the Rating Agencies deliver to the
Indenture Trustee and the Master Servicer a written confirmation that the
Servicer is approved by the Rating Agencies and the Servicer assumes all the
authority, power and responsibility of Empire Subservicer hereunder or (ii) the
Servicer appoints another entity to act as Subservicer and the Rating Agencies
deliver to the Indenture Trustee and the Master Servicer a written confirmation
that such entity is approved by the Rating Agencies.
(i) SERVICER TO SUCCEED EMPIRE SUBSERVICER. On or after the receipt
by Empire Subservicer of written notice of any termination pursuant to SECTION
4.05(G) OR (H) or following Empire Subservicer's resignation pursuant to SECTION
4.05(C) above, all authority and power of Empire Subservicer under this
Agreement, shall pass to and be vested in the Servicer, and, without limitation,
the Servicer is hereby authorized and empowered, as attorney-in-fact or
otherwise, to execute and deliver, on behalf of and at the expense of Empire
Subservicer, any and all documents and other instruments and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Home Loans and related documents, or otherwise. Empire
Subservicer agrees promptly (and in any event no later than five Business Days
subsequent to such notice) to provide the Servicer with all documents and
records requested by it to enable it to assume the Subservicer's functions under
this Agreement, and to cooperate with the Servicer in effecting the termination
of Empire Subservicer's responsibilities and rights under this Agreement,
including, without limitation, the transfer within one Business Day to the
Servicer for administration by it of all cash amounts which at the time shall be
or should have been credited by Empire Subservicer to the Collection Account
held by or on behalf of Empire Subservicer, or thereafter received with respect
to the Home Loans serviced by the Empire Subservicer. Any amounts received by
Empire Subservicer with respect to the Home Loans after removal or resignation
of Empire Subservicer hereunder shall be remitted directly and promptly to the
Servicer.
(j) TERMINATION OR DEFAULT OF SERVICER. Notwithstanding anything in
this Agreement to the contrary, if the Servicer is removed or resigns in
accordance under this Agreement or is in default with respect to this Agreement,
Empire Subservicer may not be terminated as the Subservicer other than in
accordance with the provisions of this SECTION 4.05.
(k) REALLOCATION OF EMPIRE SUBSERVICING FEE. If an Empire
Subservicer Event of Default occurs and has not been remedied, then, until the
servicing of the Home Loans hereunder is transferred to the Servicer, the Empire
Subservicing Fee otherwise payable to Empire Subservicer hereunder shall be paid
as follows: (1) first, to Empire Subservicer an amount equal to the portion of
the Empire Subservicing Fee as calculated based on a fee rate of 0.25% (25 basis
points); (2) second, to the Indenture Trustee any remaining amount for the
deposit into an escrow or reserve account established pursuant to SECTION
10.01(B) hereof, until the balance of such account equals $100,000; and (3)
third, to Empire Subservicer any remaining amount. In connection with the
transfer of servicing to a successor servicer, amounts on deposit in such escrow
account shall be remitted pursuant to SECTION 10.02 hereof; provided, that any
amounts remaining in such escrow account after all payments have been made
pursuant to SECTION 10.02 hereof shall be paid to Empire Subservicer.
Empire Subservicer hereby grants to the Indenture Trustee a security
interest in all of Empire Subservicer's right, title and interest in, to and
under any escrow account established pursuant to SECTION 10.01(B) and all monies
deposited therein from time to time, as security for its obligations under this
Agreement; and this Agreement constitutes a security agreement under applicable
law.
(l) NOTICE AND APPROVAL. Any provision of this Agreement requiring
notice to be delivered to, or approval or consent to be received with respect
to, Empire Subservicer shall be rendered void by the termination or resignation
of Empire Subservicer hereunder, but such provision only to be rendered void to
the extent it relates to Empire Subservicer in its capacity as Subservicer.
(m) EMPIRE SUBSERVICER COOPERATION. Empire Subservicer shall act, in
a good faith and reasonable manner, to assist and cooperate with the Servicer in
performing Empire Subservicer's duties and obligations under this Agreement.
Section 4.06 SUBSERVICING.
(a) APPOINTMENT AND TERMINATION OF SUBSERVICERS. In the event Empire
Subservicer is not acting as Subservicer hereunder, the Servicer may enter into
Subservicing Agreements for any servicing and administration of Home Loans with
any institution that (i) is an Eligible Servicer; (ii) is approved by the Master
Servicer; and (iii) is in compliance with the laws of each state necessary to
enable it to perform its obligations under such Subservicing Agreement. The
Servicer shall give prior written notice to the Master Servicer, the Grantor
Trustee and the Indenture Trustee of the appointment of any Subservicer. The
Servicer shall be entitled to terminate any Subservicing Agreement in accordance
with the terms and conditions of such Subservicing Agreement and to either
service the related Home Loans directly or enter into a Subservicing Agreement
with a successor subservicer which qualifies hereunder.
In the event of termination of any Subservicer, and unless a
successor Subservicer has otherwise been appointed, all servicing obligations of
such Subservicer shall be assumed simultaneously by the Servicer without any
additional act or deed on the part of such Subservicer or the Servicer, and the
Servicer shall service directly the related Home Loans.
Each Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Master Servicer or the Grantor
Trustee in the event that the Servicer shall, for any reason, no longer be the
Servicer. In no event shall any Subservicing Agreement require the Grantor
Trustee, as Successor Servicer, for any reason whatsoever to pay compensation to
a Subservicer in order to terminate such Subservicer.
(b) SERVICER LIABILITY. Notwithstanding any Subservicing Agreement
or the appointment of Empire Funding as Subservicer under SECTION 4.05, any of
the provisions of this Agreement relating to agreements or arrangements between
the Servicer and a Subservicer or reference to actions taken through a
Subservicer or otherwise, the Servicer shall remain obligated and primarily
liable to the Master Servicer, the Grantor Trustee and the Grantor Trust Holder
for the servicing and administration of the Home Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Home Loans. For purposes of this Agreement, the Servicer shall be deemed to
have received payments on Home Loans when the Subservicer has actually received
such payments and, unless the context otherwise requires, references in this
Agreement to actions taken or to be taken by the Servicer in servicing the Home
Loans include actions taken or to be taken by a Subservicer on behalf of the
Servicer. The Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the Servicer by such Subservicer, and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
(c) ASSUMPTION BY SUCCESSOR SERVICER. In the event the Servicer
shall for any reason no longer be the Servicer (including by reason of an Event
of Default), the successor servicer, on behalf of the Grantor Trustee, the
Indenture Trustee, the Securityholders and the Grantor Trust Holder pursuant to
SECTION 4.07 hereof, shall thereupon assume all of the rights and obligations of
the Servicer under each Subservicing Agreement that the Servicer may have
entered into, unless the successor servicer elects to terminate any Subservicing
Agreement in accordance with its terms. Notwithstanding anything to the contrary
contained herein, in no event shall a successor servicer be entitled to
terminate Empire Subservicer solely as a result of the Servicer no longer acting
as such hereunder. The successor servicer shall be deemed to have assumed all of
the Servicer's interest therein and to have replaced the Servicer as a party to
each Subservicing Agreement to the same extent as if the Subservicing Agreements
had been assigned to the assuming party, except that the Servicer shall not
thereby be relieved of any liability or obligations under the Subservicing
Agreements which accrued prior to the transfer of servicing to the successor
servicer. The Servicer, at its expense and without right of reimbursement
therefor, shall, upon request of the successor servicer, deliver to the assuming
party all documents and records relating to each Subservicing Agreement and the
Home Loans then being serviced and an accounting of amounts collected and held
by it and otherwise use its best efforts to effect the orderly and efficient
transfer of the Subservicing Agreements to the assuming party.
(d) ENFORCEMENT OF SUBSERVICING. As part of its servicing activities
hereunder, the Servicer, for the benefit of the Grantor Trustee, the Grantor
Trust Holder, the Indenture Trustee and the Securityholders, shall enforce the
obligations of each Subservicer under the related Subservicing Agreement. Such
enforcement, including, without limitation, the legal prosecution of claims and
the pursuit of other appropriate remedies, shall be in such form and carried out
to such an extent and at such time as the Servicer, in its good faith business
judgment, would require were it the owner of the related Home Loans. The
Servicer shall pay the costs of such enforcement at its own expense and shall be
reimbursed therefor only (i) from a general recovery resulting from such
enforcement to the extent, if any, that such recovery exceeds all amounts due in
respect of the related Home Loan or (ii) from a specific recovery of costs,
expenses or attorneys' fees against the party against whom such enforcement is
directed.
(e) LIMITATIONS ON PARTIES. Any Subservicing Agreement that may be
entered into and any other transactions or services relating to the Home Loans
involving a Subservicer shall be deemed to be between the Subservicer and the
Servicer alone and none of the Master Servicer, the Grantor Trustee, the Owner
Trustee, the Indenture Trustee, the Securityholders or the Grantor Trust Holder
shall be deemed parties thereto or shall have any claims, rights, obligations,
duties or liabilities with respect to the Subservicer in its capacity as such,
except as set forth in SECTION 4.06(C).
(f) SUBSERVICING ACCOUNT. In those cases where a Subservicer
receives or collects any payments from a Home Loan, the Subservicer will be
required to establish and maintain one or more accounts (collectively, the
"SUBSERVICING ACCOUNT"). The Subservicing Account shall be an Eligible Account.
The Subservicer will be required to deposit into the Subservicing Account, no
later than the first Business Day after receipt, all proceeds of Home Loans
received by the Subservicer and remit such proceeds to the Servicer for deposit
in the Collection Account not later than the Business Day following receipt
thereof by the Subservicer. Notwithstanding anything in this Subsection to the
contrary, the Subservicer shall only be able to withdraw funds from the
Subservicing Account for the purpose of remitting such funds to the Servicer for
deposit into the Collection Account. The Servicer shall require the Subservicer
to cause any collection agent of the Subservicer to send a copy to the Servicer
of each statement of monthly payments collected by or on behalf of the
Subservicer within five Business Days after the end of every month, and the
Servicer shall compare the information provided in such reports with the
deposits made by the Subservicer into the Collection Account for the same
period. The Servicer shall be deemed to have received payments on the Home Loans
on the date on which the Subservicer has received such payments.
Section 4.07 SUCCESSOR SERVICERS. In the event that the Servicer is
terminated pursuant to SECTION 10.01 hereof, or resigns pursuant to SECTION 9.04
hereof or otherwise becomes unable to perform its obligations under this
Agreement, the Master Servicer or the Grantor Trustee, as applicable, will
become the successor servicer or will appoint a successor servicer in accordance
with the provisions of SECTION 10.02 hereof; PROVIDED, HOWEVER, that any
successor servicer, excluding the Master Servicer or the Grantor Trustee, as
applicable, shall satisfy the requirements of an Eligible Servicer and shall be
approved by the Rating Agencies.
Section 4.08 COLLECTIONS FROM INSURANCE POLICIES. Any Insurance
Proceeds collected by the Servicer under any Insurance Policies shall be paid
over or applied by the Servicer as follows:
(a) In the case of amounts received in respect of any Home Loan:
(i) for the restoration or repair of the affected Property, in
which event such amounts shall be released to the Obligor in accordance
with the terms of the related Debt Instrument, Mortgage or Manufactured
Home Contract, or
(ii) to the extent not so used, in reduction of the Principal
Balance of the related Home Loan, in which event such amounts shall be
deposited into the Collection Account pursuant to SECTION 5.01(B)(I)
hereof,
unless the related Debt Instrument, Mortgage or Manufactured Home Contract
require a different application, in which case such amounts shall be applied in
the manner provided therein; and
(b) Subject to SECTIONS 4.10 and 4.11(C) hereof, in the case of
amounts received in respect of any Foreclosure Property, for the restoration or
repair of such Foreclosure Property, unless the Servicer determines, consistent
with the servicing standard set forth in SECTION 4.01 hereof, that such
restoration or repair is not in the best economic interest of the Grantor Trust
Holder, in which event such amounts shall be deposited into the Collection
Account pursuant to SECTION 5.01(B)(I) hereof.
Section 4.09 REPORTS TO THE SECURITIES AND EXCHANGE COMMISSION; 144A
INFORMATION. (a) The Indenture Trustee shall, on behalf of the Issuer, cause to
be filed with the Securities and Exchange Commission within 15 days after each
Payment Date all monthly Payment Statements on Form 8-K and annual reports on
Form 10-K in the form attached as EXHIBIT E or as otherwise required to be filed
under the provisions of the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Securities and Exchange Commission thereunder. Upon
the request of the Indenture Trustee, each of the Servicer and each Transferor
shall cooperate with the Indenture Trustee in the preparation of any such report
and shall provide to the Indenture Trustee in a timely manner all such
information or documentation as the Indenture Trustee may reasonably request in
connection with the performance of its duties and obligations under this SECTION
4.09. The Indenture Trustee shall indemnify and hold harmless each of the Issuer
and the Depositor for any costs, expenses or liability arising as a result of
the failure of the Indenture Trustee to perform its duties and obligations under
this SECTION 4.09.
(b) The Servicer shall provide to the Indenture Trustee, if
requested, information regarding the Class B-2 Notes and the Home Loans and such
other information as the Indenture Trustee shall be required to deliver to any
holder of a Class B-2 Note and any prospective transferee designated by any such
holder to satisfy the condition of eligibility set forth in Rule 144A(d)(4)
under the Securities Act.
Section 4.10 RECOVERY FROM DEFAULTED HOME LOANS AND LIQUIDATED HOME
LOANS.
(a) GENERAL STANDARD. If any Home Loan becomes a Defaulted Home
Loan, then the Servicer, in accordance with the servicing standard in SECTION
4.01(A), shall take such action as it shall deem to be in the best interest of
the Grantor Trust Holder and Securityholders, including but not limited to (i)
repurchasing or substituting such Defaulted Home Loan pursuant to SECTION 3.05,
(ii) accepting short payoffs or short sales, (iii) entering into assumptions and
modifications, (iv) referring such Defaulted Home Loan to a collection agency or
attorney, or pursuing collection litigation or alternative court proceedings to
foreclosure actions, (v) selling such Defaulted Home Loan to another person,
(vi) foreclosing or proceeding against the Property securing such Defaulted Home
Loan, (vii) exercising any power of sale to the extent permitted by law, (viii)
obtain a deed in lieu of foreclosure, or (ix) otherwise acquiring possession of
or title to any Mortgaged Property or Manufactured Home, by operation of law or
otherwise. The Servicer shall be acting in the best interests of the Grantor
Trust Holder and Securityholders, when the Servicer, in accordance with the
Accepted Servicing Procedures, undertakes actions to collect a Defaulted Home
Loan that have a higher likelihood of a reasonable recovery within a shorter
time period, and foregoes taking actions that have a lower likelihood of a
larger recovery over a longer time period. If with respect to a Defaulted Home
Loan the Servicer decides not to proceed against the Property or Obligor, as
applicable, then the Servicer shall determine in accordance with the Accepted
Servicing Procedures that there is not a reasonable likelihood of (A) recovering
an economically significant amount attributable to the outstanding interest and
principal owing on such Home Loan as a result of such proceeding, in excess of
(B) the costs and expenses to obtain such recovery (including without limitation
any Servicing Advances and, if applicable, the outstanding indebtedness of all
Superior Liens), and in relation to (C) the expected timing of such recovery
therefrom. If the Servicer makes a determination not to proceed either against
the Property or the Obligor, then the Servicer shall give notice to such effect
to the Master Servicer, the Grantor Trustee and the Indenture Trustee.
In connection with the monthly reporting in SECTION 6.01(A) hereof,
the Servicer shall deliver to the Indenture Trustee and the Master Servicer a
report (in the form of EXHIBIT C attached hereto) (the "LOAN LIQUIDATION
REPORT"), which sets forth the liquidation information for each Home Loan that
became a Liquidated Home Loan during the preceding Due Period. In addition, on a
monthly basis, the Servicer shall provide a report to the Master Servicer that
summarizes the final actions of the Servicer taken during the preceding Due
Period with respect to any Home Loans pursuant to this Section.
Neither the Master Servicer, the Grantor Trustee, the Indenture
Trustee, the Issuer nor the Depositor shall have any responsibility or
obligation to review or verify any determination or approve any actions, made by
the Servicer pursuant to this SECTION 4.10.
(b) MODIFICATIONS OF DEFAULTED HOME LOANS. Notwithstanding SECTION
4.01(C) hereof, in accordance with SECTION 4.10(A), the Servicer may modify,
vary or waive the terms of any Defaulted Home Loan in a manner that, in the
Servicer's good faith judgement, would minimize the loss that might otherwise be
experienced with respect to such Defaulted Home Loan under the circumstances,
including without limitation the deferment or forgiveness of any principal or
interest payments due or to become due thereon; PROVIDED, HOWEVER, that no such
modification, variation or waiver of a Home Loan shall involve the execution by
the related Obligor of a new Debt Instrument. If a Defaulted Home Loan is
modified pursuant to this Section in a manner that releases a portion of the
Principal Balance thereof, then such released amount shall be included as "Net
Loan Losses" hereunder.
(c) SHORT SALES AND SUBSTITUTIONS OF COLLATERAL. In accordance with
the Accepted Servicing Procedures, the Servicer may permit an Obligor, who is
selling their Property that constitutes such Obligor's principal residence and
relocating to another location, to substitute as collateral for the related Home
Loan the Obligor's new single family residence in place of the Property being
sold or any other real or personal property of the Obligor, which may include an
interim substitution of personal property pending the Obligor's acquisition of a
new residence. Other than the pledge of any incident or ancillary personal
property in connection with the pledge of real property, any pledge of personal
property by an Obligor as for the related Home Loan pursuant to this Subsection
("SUBSTITUTE COLLATERAL") shall be limited to personal property consisting of
one or more of the following types: (1) a deposit account at any federally
insured depository institution; (2) a certificate of deposit or time deposit of
any federally insured depository institution; or (3) such other types of
personal property that have been approved by the Grantor Trustee, the Indenture
Trustee and each Rating Agency as a form of Substitute Collateral hereunder,
which may include an instrument (within the meaning of Section 9-105(1) of the
UCC) or a security (within the meaning of Section 8-102(1) of the UCC). Under
certain circumstances, if such Obligor has received net proceeds from the sale
of the prior residence that will not be applied to the purchase of the new
residence, then the Servicer, in its discretion, may require that such Obligor
either (i) make a partial prepayment in reduction of the principal balance of
the Home Loan, or (ii) place such funds into a depository account or certificate
of deposit as collateral for the related Home Loan. The Servicer shall undertake
all actions, as deemed necessary or appropriate by the Servicer to effectuate
the substitution of any real or personal property by an Obligor as collateral
for the related Home Loan pursuant to this Subsection and the release of the
then existing Property including all such actions to effectuate: (1) the
inclusion of the security interests in such Substitute Collateral as part of the
Grantor Trust Estate; (2) the delivery to the applicable Custodian for inclusion
in the related Grantor Trustee's Home Loan File of an appropriate security
agreement with respect to such Substitute Collateral (including a new Mortgage
or Manufactured Home Contract with respect to any real property being
substituted); (3) the delivery and pledge of the security interests in such
Substitute Collateral to the Grantor Trustee under the Grantor Trust Agreement,
including the delivery of any substitute Collateral consisting of primarily
personal property in the same manner as provided by the definition of "Delivery"
in SECTION 1.01 hereof; and (4) any other actions as reasonably requested by the
Grantor Trustee or Indenture Trustee to accomplish such substitution of
Substitute Collateral.
In addition, if an Obligor is selling their Property and the
circumstances relating to such sale involve compensating factors or a distressed
situation, in each case as determined solely by the Servicer, then in accordance
with the Accepted Servicing Procedures the Servicer may: (i) accept a partial
prepayment by the Obligor of the Principal Balance in consideration for a
release of the Property as security for the Home Loan, but with a continuation
of the Debt Instrument and the Home Loan on an unsecured basis (i.e., a "short
sale"); or (ii) accept a settlement involving a partial payment by the Obligor
in consideration for the termination of the Home Loan, the cancellation of the
Debt Instrument and the release of the Property (i.e., a "short pay-off").
(d) SALE AND CHARGE-OFF OF DEFAULTED HOME LOANS. In accordance with
SECTION 4.10(A) HEREOF, the Servicer, in its discretion, shall have the power
and authority to sell any Defaulted Home Loan or Liquidated Home Loan, on behalf
of the Grantor Trustee for the benefit of the Grantor Trust Holder and the
Securityholders, to one or more Persons in a manner that will be likely to
obtain a reasonable recovery of net proceeds therefrom under the circumstances.
Notwithstanding the preceding sentence, an Affiliate of the Servicer shall have
the right to purchase any Defaulted Home Loan, if at the time of such purchase
none of the original ratings assigned to the Notes by any Rating Agency have
been downgraded, or if a ratings downgrade has occurred each Rating Agency
consents to such purchase. The purchase price paid for any Defaulted Home Loan
sold to an Affiliate of the Servicer shall not be less than the price that, in
the reasonable judgment of the Servicer, would have been paid for such Defaulted
Home Loan by Person who is not an Affiliate of the Servicer. The Servicer shall
promptly deposit the Net Liquidation Proceeds, as applicable, from the sale of
any Defaulted Home Loans or Liquidated Home Loans into the Collection Account in
accordance with SECTION 5.01 hereof.
(e) DEFAULTED SUPERIOR LIENS. If the Servicer is notified that any
lienholder under a Superior Lien has accelerated or intends to accelerate the
obligations secured by such Superior Lien, or has declared or intends to declare
a default under the related mortgage or the promissory note secured thereby, or
has filed or intends to file an election to have any Property sold or
foreclosed, then, in accordance with the SECTION 4.10(A) hereof and on behalf of
the Grantor Trust and the Grantor Trustee, the Servicer shall take all
reasonable actions that are necessary to protect the interests of the Grantor
Trust Holder and/or to preserve the security of the related Home Loan. The
Servicer shall promptly notify the Grantor Trustee if it determines not to take
action with respect to such Superior Lien.
(f) FORECLOSURE ACTIONS. In accordance with the criteria for
proceeding against the Property set forth in SECTION 4.10(A) hereof, unless
otherwise prohibited by applicable law or court or administrative order, the
Servicer, on behalf of the Grantor Trust Holders, may, at any time, institute
foreclosure proceedings to the extent permitted by law, exercise any power of
sale to the extent permitted by law, obtain a deed in lieu of foreclosure, or
otherwise acquire possession of or title to the related Property, by operation
of law or otherwise. In accordance with SECTION 4.10(A) hereof, and (i) in the
case of any Mortgage or Manufactured Home Contract in a first lien position the
Servicer shall, or (ii) in the case of any Mortgage or Manufactured Home
Contract in a subordinate lien position the Servicer shall have the option to,
institute foreclosure proceedings, repossess, exercise any power of sale to the
extent permitted by law, obtain a deed in lieu of foreclosure or otherwise
acquire possession of or title to any Property, by operation of law or
otherwise; PROVIDED, HOWEVER, that in each case the Servicer shall have
determined there is a reasonable likelihood of (A) recovering an economically
significant amount attributable to the outstanding interest and principal owing
on such Home Loan as a result of such actions, in excess of (B) the costs and
expenses to obtain such recovery (including without limitation any Servicing
Advances and, if applicable, the outstanding indebtedness of all Superior
Liens), and in relation to (C) the expected timing of such recovery therefrom.
Prior to acquiring any Foreclosure Property, however, the Servicer
shall cause a review to be performed, in accordance with the Accepted Servicing
Procedures, on the related Property by a company such as Equifax, Inc. or
Toxicheck, and the scope of such review shall be limited to the review of public
records and documents for indications that such Property has on it, has under
it, or is near hazardous or toxic material or waste. If such review reveals that
the Property has on it, under it or is near hazardous or toxic material or waste
or reveals any other environmental problem, and the Servicer decides to proceed
with the acquisition of such Property, then the Servicer shall provide to the
Master Servicer, the Grantor Trustee and the Indenture Trustee an Officer's
Certificate with a copy of the related report that substantiates such decision.
Such Officer's Certificate shall provide that based on an analysis of all
available information in the report (including potential clean up costs and
liability claims) at the time it is the best judgment of the Responsible Officer
making such certification that such foreclosure shall increase Net Liquidation
Proceeds to the Grantor Trust. Upon the receipt of any such Officer's
Certificate, the Grantor Trustee, in its reasonable discretion, shall determine
whether to take title to such Property. The Grantor Trustee shall promptly
forward such report and Officer's Certificate to the Grantor Trust Holder.
(g) POWERS OF ATTORNEY. The Grantor Trustee shall furnish the
Servicer, within 5 days after request of the Servicer therefor, any powers of
attorney and other documents necessary and appropriate to carry out its duties
under SECTIONS 4.10 and 4.11 hereof, including any documents or powers of
attorney necessary to foreclose any Mortgage or Manufactured Home Contract. The
forms of any such powers or documents shall be appended to such requests.
(h) POST LIQUIDATION PROCEEDS. During any Due Period occurring after
a Home Loan becomes a Liquidated Home Loan, the Servicer shall deposit into the
Collection Account any Net Liquidation Proceeds received by it with respect to
such Liquidated Home Loan or the related Foreclosure Property.
Section 4.11 TITLE, MANAGEMENT AND DISPOSITION OF FORECLOSURE
PROPERTY.
(a) GENERAL STANDARD. If any Property is acquired in foreclosure or
by deed in lieu of foreclosure (a "FORECLOSURE PROPERTY") pursuant to SECTION
4.10, the deed or certificate of sale shall be taken in the name of the Grantor
Trustee for the benefit of the Grantor Trust Holder. The Servicer, or its
agents, shall manage, conserve, protect, operate, market, sell and liquidate
each Foreclosure Property for the Grantor Trustee and the Grantor Trust Holder
solely for the purpose of the prudent and prompt disposition and sale of such
Foreclosure Property in accordance with the Accepted Servicing Procedures. The
Servicer shall be responsible for all costs and expenses incurred by it with
respect to any Foreclosure Property; PROVIDED, HOWEVER, that such costs and
expenses will be recoverable as Servicing Advances by the Servicer as
contemplated herein.
(b) SALE OF FORECLOSURE PROPERTY. The Servicer may offer to sell to
any Person any Foreclosure Property, if and when the Servicer determines, in a
manner consistent with the Accepted Servicing Procedures, that such a sale would
be in the best interests of the Grantor Trust. The Servicer shall give the
Master Servicer, the Grantor Trustee and the Indenture Trustee notice of its
intention to sell any Foreclosure Property and shall accept the highest bid
received from any Person that is determined to be a fair price for such
Foreclosure Property by the Servicer, if the highest bidder is a Person other
than an Affiliate of the Servicer, or by an Independent appraiser retained by
the Servicer, if the highest bidder is an Affiliate of the Servicer. In the
absence of any bid determined to be fair as aforesaid, the Servicer shall offer
the affected Foreclosure Property for sale to any Person, other than an
Affiliate of the Servicer, in a commercially reasonable manner for a period of
not less than 10 or more than 30 days, and shall accept the highest cash bid
received therefor in excess of the highest bid previously submitted. If no such
bid is received, any Affiliate of the Servicer may resubmit its original bid and
the Servicer shall accept the highest outstanding cash bid, regardless of from
whom received. No Affiliate of the Servicer shall be obligated to submit a bid
to purchase any Foreclosure Property and, notwithstanding anything to the
contrary herein, neither the Grantor Trustee, the Owner Trustee or the Indenture
Trustee, in its individual capacity, nor any of its Affiliates may bid for or
purchase any Foreclosure Property pursuant hereto.
Subject to the provisions of SECTION 4.10 hereof, the Servicer shall
act on behalf of the Grantor Trustee in negotiating and taking any other action
necessary or appropriate in connection with the sale of any Foreclosure
Property, including the collection of all amounts payable in connection
therewith. Any sale of a Foreclosure Property shall be without recourse to the
Grantor Trustee, the Master Servicer, the Servicer or the Grantor Trust and, if
consummated in accordance with the terms of this Agreement, neither the Servicer
nor the Grantor Trustee shall have any liability to any Grantor Trust Holder,
the Master Servicer or any Securityholder with respect to the purchase price
therefor accepted by the Servicer or the Grantor Trustee.
(c) RESTORATION OF FORECLOSURE PROPERTY. If a Foreclosure Property
has suffered damage and the complete restoration of such property is not fully
reimbursable by the proceeds from any hazard insurance policies, then the
Servicer shall not be required to make any Servicing Advance for the restoration
of such Foreclosure Property, unless in the reasonable judgment of the Servicer,
as evidenced by an Officer's Certificate (which shall be delivered to the Master
Servicer), such restoration is likely to increase the net proceeds from the
liquidation of the related Home Loan after reimbursement for all Servicing
Advances. (See also SECTION 4.08 regarding collections from insurance policies.)
(d) CONTRACTING FOR OPERATION OF FORECLOSURE PROPERTY. In accordance
with the Accepted Servicing Procedures, the Servicer may contract with any
independent contractor for the operation, management, marketing or sale of any
Foreclosure Property; PROVIDED, HOWEVER, that the terms and conditions of any
such contract shall not be inconsistent with this Agreement; PROVIDED, FURTHER,
that none of the provisions of this SECTION 4.11 relating to any such contract
or to actions taken through any such independent contractor shall be deemed to
relieve the Servicer of any of its duties and obligations hereunder with respect
to the operation, management, marketing or sale of any such Foreclosure
Property. The Servicer shall be entitled to enter into any agreement with any
independent contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Servicer by such independent
contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. The Servicer shall not be liable for any fees owed by it
to any such independent contractor and any amounts so expended shall be deemed
Servicing Advances.
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS
Section 5.01 COLLECTION ACCOUNT AND NOTE PAYMENT ACCOUNT.
(a) (i) ESTABLISHMENT OF COLLECTION ACCOUNT. The Servicer, for the
benefit of the Securityholders, the Indenture Trustee and the Grantor Trust
Holder, shall cause to be established and maintained in the name of the
Indenture Trustee one or more Collection Accounts (collectively, the "COLLECTION
ACCOUNT"), which shall be separate Eligible Accounts and may be
interest-bearing, and which shall be entitled "Collection Account, U.S. Bank
National Association, as Indenture Trustee, in trust for the Empire Funding Home
Loan Asset Backed Notes, Series 1999-1." The Collection Account may be
maintained with the Indenture Trustee or any other depository institution which
satisfies the requirements set forth in the definition of Eligible Account. The
creation of any Collection Account other than one maintained with the Indenture
Trustee shall be evidenced by a letter agreement between the Servicer and the
depository institution acceptable to the Indenture Trustee. A copy of such
letter agreement shall be furnished to the Indenture Trustee and, upon request
of any Grantor Trust Holder, to such Grantor Trust Holder. Funds in the
Collection Account shall be invested in accordance with SECTION 5.03 hereof.
The Collection Account shall be established, as of the Closing Date,
with the Indenture Trustee as an Eligible Account pursuant to the definition
thereof. The Collection Account may, upon written notice to the Grantor Trustee
and the Indenture Trustee, be transferred to a different depository institution
so long as such transfer is to an Eligible Account acceptable to the Indenture
Trustee.
(ii) ESTABLISHMENT OF NOTE PAYMENT ACCOUNT. No later than the
Closing Date, the Servicer, for the benefit of the Noteholders, shall
cause to be established and maintained with the Indenture Trustee one or
more Note Payment Accounts (collectively, the "NOTE PAYMENT ACCOUNT"),
which shall be separate Eligible Accounts and may be interest-bearing, and
which shall be entitled "Note Payment Account, U.S. Bank National
Association, as Indenture Trustee, in trust for the Empire Funding Home
Loan Asset Backed Notes, Series 1999-1." Funds in the Note Payment Account
shall be invested in accordance with SECTION 5.03 hereof.
(b) (i) DEPOSITS TO COLLECTION ACCOUNT. The Servicer shall use its
best efforts to deposit or cause to be deposited (without duplication), within
two (2) Business Days after receipt thereof, into the Collection Account and
retain therein in trust for the benefit of the Grantor Trust Holder:
(A) all payments of principal and interest on the Home
Loans collected after the Cut-Off Date, but excluding 80% of the
interest collected on each Home Loan during the first Due Period
which shall be retained by the Transferor that sold such Home Loan
to the Depositor;
(B) all Net Liquidation Proceeds pursuant to SECTION
4.11 hereof;
(C) all Insurance Proceeds;
(D) all Released Property Proceeds;
(E) any amounts payable in connection with the
repurchase of any Home Loan and the amount of any Substitution
Adjustment pursuant to SECTION 2.06 of the Grantor Trust Agreement
and SECTION 3.05 hereof;
(F) the deposit of the Termination Price under SECTION
11.01 hereof; and
(G) amounts received from Empire Subservicer or the
Servicer pursuant to SECTION 5.03(B) hereof in respect of losses on
funds held in the Collection Account.
The Servicer or Empire Subservicer, as applicable, shall be entitled
to retain and not deposit into the Collection Account any amounts received with
respect to a Home Loan that constitute additional servicing compensation
pursuant to SECTION 7.03 hereof or additional subservicing compensation pursuant
to SECTION 4.05(B) hereof, and such amounts retained by the Servicer or Empire
Subservicer during a Due Period shall be excluded from the calculation of the
Servicing Compensation or Empire Subservicing Compensation, as applicable, that
is distributable to the Servicer or Empire Subservicer, as applicable, from the
Note Payment Account on the next Payment Date following such Due Period.
(ii) DEPOSITS TO NOTE PAYMENT ACCOUNT.
(A) On the sixth (6th) Business Day prior to each
Payment Date, the Indenture Trustee (based on information provided
by the Servicer for such Payment Date) shall withdraw from the
Collection Account the Available Collection Amount as a distribution
in respect of the Grantor Trust Certificate pursuant to SECTION 5.01
of the Grantor Trust Agreement and deposit such into the Note
Payment Account for such Payment Date; and
(B) Amounts deposited by the Master Servicer pursuant to
SECTION 5.03(B) hereof on account of net losses sustained, if any,
by investments held therein.
(iii) WITHDRAWALS FROM COLLECTION ACCOUNT. The Indenture
Trustee, at the direction of the Servicer, shall also make the following
withdrawals from the Collection Account, in no particular order of
priority:
(A) to withdraw any amount not required to be deposited
in the Collection Account or deposited therein in error;
(B) to withdraw any Servicing Advance Reimbursement
Amounts; and
(C) to clear and terminate the Collection Account in
connection with the termination of this Agreement.
(c) WITHDRAWALS FROM NOTE PAYMENT ACCOUNT. To the extent funds are
available in the Note Payment Account, the Indenture Trustee (based on the
information provided by the Servicer contained in the Servicer's Monthly
Remittance Report for such Payment Date) shall make withdrawals therefrom by
9:00 a.m. (New York City time) on each Payment Date, for application in the
following order of priority:
(i) to distribute on such Payment Date the following amounts
related to such Payment Date pursuant to the Indenture in the following
order: (a) to the Master Servicer an amount equal to the Master Servicer
Compensation and all unpaid Master Servicer Compensation from prior
Payment Dates; (b) to Empire Funding (if Empire Funding is the Subservicer
for such Payment Date) an amount equal to the Empire Subservicer
Compensation (net of the sum of any amounts retained prior to deposit into
the Collection Account pursuant to subsection (b)(1) above) and all unpaid
Empire Subservicer Compensation from prior Payment Dates; (c) to the
Servicer, on behalf of the Grantor Trustee, an amount equal to the
Servicing Compensation (net of the sum of any amounts retained prior to
deposit into the Collection Account pursuant to subsection (b)(1) above)
and all unpaid Servicing Compensation from prior Payment Dates; (d) to the
Indenture Trustee, an amount equal to the Indenture Trustee Fee and all
unpaid Indenture Trustee Fees from prior Payment Dates; (e) to the Owner
Trustee, an amount equal to the Owner Trustee Fee and all unpaid Owner
Trustee Fees from prior Payment Dates; (f) to the Custodian on behalf of
the Grantor Trustee, an amount equal to the Custodian Fee, if any, and all
unpaid Custodian Fees from prior Payment Dates; and (g) to the Grantor
Trustee, an amount equal to the Grantor Trustee Fee, if any, and all
unpaid Grantor Trustee Fees from prior Payment Dates; and
(ii) subject to the priority of payments in Subsections
5.01(d) and (e) below, to deposit into the Certificate Distribution
Account the applicable portions of the Available Payment Amount
distributable in respect of the Residual Interest Certificates as
calculated pursuant to subsection (e) of this SECTION 5.01 on such Payment
Date.
Notwithstanding that the Notes have been paid in full, the Indenture
Trustee and the Servicer shall continue to maintain the Collection Account and
the Note Payment Account hereunder until the Class Principal Balance of each
Class of Notes has been reduced to zero.
(d) REGULAR PAYMENT AMOUNT WITHDRAWALS FROM NOTE PAYMENT ACCOUNT. On
each Payment Date, the Indenture Trustee (based on the information provided by
the Servicer contained in the Servicer's Monthly Remittance Report for such
Payment Date) shall distribute the Regular Payment Amount from the Note Payment
Account (in the case of all amounts distributable to Noteholders) and from the
Certificate Distribution Account (in the case of all amounts distributable to
Certificateholders), in the following order of priority:
(i) to the holders of the Senior Notes pro rata, their
respective portions of the Senior Noteholders Interest Payment Amount for
such Payment Date;
(ii) sequentially, to the holders of the Class M-1 and Class
M-2 Notes, in that order, their respective portions of the Mezzanine
Noteholders' Interest Payment Amount for such Payment Date;
(iii) sequentially, to the holders of the Class B-1 and Class
B-2 Notes, in that order, their respective portions of the Subordinate
Noteholders' Interest Payment Amount for such Payment Date;
(iv) (a) sequentially, to pay principal of the Class ▇-▇,
▇▇▇▇▇ ▇-▇, Class A-3, Class A-4 and Class A-5 Notes, in that order, until
their respective Class Principal Balances are reduced to zero, the amount
necessary to reduce the aggregate Class Principal Balance of the Senior
Notes to the Senior Optimal Principal Balance for such Payment Date; (b)
PROVIDED, HOWEVER, that notwithstanding the payment priorities set forth
in clause (a) above, on each Payment Date occurring on or after the
reduction of the Class Principal Balances of the Class M-1 Notes, Class
M-2 Notes, Class B-1 Notes and Class B-2 Notes to zero through the
application of Allocable Loss Amounts, payments shall be made among the
then outstanding Senior A Notes pro rata based on their respective Class
Principal Balances and not in accordance with the priorities set forth in
clause (a) above;
(v) sequentially, to pay principal of the Class M-1 Notes and
Class M-2 Notes in that order, the amount necessary to reduce the Class
Principal Balances thereof to the Class M-1 Optimal Principal Balance and
the Class M-2 Optimal Principal Balance, respectively, for such Payment
Date;
(vi) sequentially, to pay principal of the Class B-1 and Class
B-2 Notes, in that order, the amount necessary to reduce the Class
Principal Balances thereof to the Class B-1 Optimal Principal Balance and
the Class B-2 Optimal Principal Balance, respectively, for such Payment
Date;
(vii) any remaining amount after the application of funds
pursuant to clauses (i)-(vi) above to be applied in the same manner as
Excess Spread as specified in subsection (e) below.
(e) EXCESS SPREAD WITHDRAWALS FROM NOTE PAYMENT ACCOUNT. On each
Payment Date, the Indenture Trustee (based on the information provided by the
Servicer contained in the Servicer's Monthly Remittance Report for such Payment
Date) shall distribute the Excess Spread in the following order of priority (in
each case after giving effect to all payments specified in SECTION 5.01(D)
hereof):
(i) in an amount up to the Overcollateralization Deficiency
Amount, if any, as follows:
(A) sequentially, to pay principal of the Class ▇-▇,
▇▇▇▇▇ ▇-▇, Class A-3, Class A-4 Notes and Class A-5 Notes, in that
order, until their respective Class Principal Balances are reduced
to zero, the amount necessary to reduce the aggregate Class
Principal Balance of such Senior Notes to the Senior Optimal
Principal Balance for such Payment Date;
(B) sequentially, to pay principal of the Class M-1
Notes and Class M-2 Notes, in that order, until the respective Class
Principal Balances thereof have been reduced to the Class M-1
Optimal Principal Balance and Class M-2 Optimal Principal Balance,
respectively, for such Payment Date; and
(C) sequentially, to pay principal of the Class B-1
Notes and Class B-2 Notes, in that order, until the respective Class
Principal Balances thereof have been reduced to the Class B-1
Optimal Principal Balance and the Class B-2 Optimal Principal
Balance, respectively, for such Payment Date; and
(ii) sequentially, to the Class M-1 Notes, the Class M-2
Notes, Class B-1 Notes and the Class B-2 Notes, in that order, until their
respective Loss Reimbursement Deficiencies, if any, have been paid in full
(in the case of the Class M-1 Notes and Class M-2 Notes: first, to the
reimbursement of Allocable Loss Amounts until completely reimbursed and,
then, to any accrued interest thereon);
(iii) to pay any remaining amount (A) first, to the Servicer
or Empire Subservicer, as applicable, in an amount equal to any
outstanding Nonrecoverable Servicing Advances, and (B) then, for deposit
into the Certificate Distribution Account for payment to the holders of
the Residual Interest Certificates.
(f) All payments made on each Class of Notes on each Payment Date
will be made on a pro rata basis among the Noteholders of record of such Class
of Notes on the next preceding Record Date based on the Note Percentage Interest
represented by their respective Notes, without preference or priority of any
kind, and, except as otherwise provided in the next succeeding sentence, shall
be made by wire transfer of immediately available funds to the account of such
Noteholder, if such Noteholder shall own of record Notes in original
Denominations aggregating at least $250,000 and shall have so notified the
Indenture Trustee, and otherwise by check mailed to the address of such
Noteholder appearing in the Notes Register. The final payment on each Note will
be made in like manner, but only upon presentment and surrender of such Note at
the location specified in the notice to Noteholders of such final payment.
Section 5.02 CERTIFICATE DISTRIBUTION ACCOUNT.
(a) ESTABLISHMENT OF CERTIFICATE DISTRIBUTION ACCOUNT. No later than
the Closing Date, the Servicer, for the benefit of the Certificateholders, shall
cause to be established and maintained with the Indenture Trustee for the
benefit of the Owner Trustee, on behalf of the Issuer and the
Certificateholders, one or more Certificate Distribution Accounts (collectively,
the "CERTIFICATE DISTRIBUTION ACCOUNT"), which shall be separate Eligible
Accounts and may be interest-bearing, entitled "Certificate Distribution
Account, U.S. Bank National Association, as Indenture Trustee, in trust for the
Empire Funding Home Loan Owner Trust Series 1999-1." Funds in the Certificate
Distribution Account shall be invested in accordance with SECTION 5.03 hereof.
(b) DEPOSITS TO AND DISTRIBUTIONS FROM CERTIFICATE DISTRIBUTION
ACCOUNT. On each Payment Date the Indenture Trustee shall withdraw from the Note
Payment Account all amounts required to be deposited into the Certificate
Distribution Account with respect to such Payment Date pursuant to SECTION
5.01(C)(II) hereof and, on behalf of the Owner Trustee, shall deposit such
amounts into the Certificate Distribution Account. The Indenture Trustee shall
make payments of all remaining amounts on deposit in the Note Payment Account to
the holders of the Notes to the extent of amounts due and unpaid on the Notes
for principal thereof and interest thereon in accordance with SECTION 5.01(D)
and (E) hereof. The Indenture Trustee, on behalf of the Owner Trustee, shall
distribute all amounts on deposit in the Certificate Distribution Account to the
holders of the Residual Interest Certificates. The Indenture Trustee, on behalf
of the Owner Trustee, also shall withdraw from the Certificate Distribution
Account any amount not required to be deposited in the Certificate Distribution
Account or deposited therein in error.
(c) DISTRIBUTIONS ON THE RESIDUAL INTEREST CERTIFICATES. All
distributions made on the Residual Interest Certificates on each Payment Date
will be made pro rata among the holders of the Residual Interest Certificates of
record on the next preceding Record Date based on their Percentage Interest in
the Residual Interest Certificates, without preference or priority of any kind,
and, except as otherwise provided in the next succeeding sentence, shall be made
by wire transfer of immediately available funds to the account of each such
holder, if such holder shall own of record a Residual Interest Certificate in an
original denomination aggregating at least a 50% holding of the Residual
Interest Certificates and shall have so notified the Indenture Trustee at least
5 Business Days prior thereto, and otherwise by check mailed to the address of
such Residual Interest holder appearing in the Certificate Register. The final
distribution on each Residual Interest Certificate will be made in like manner,
but only upon presentment and surrender of such Residual Interest Certificate at
the location specified in the notice to holders of the Residual Interest
Certificates of such final distribution. Any amount distributed to the holders
of the Residual Interest Certificates on any Payment Date shall not be subject
to any claim or interest of holders of the other Classes of Notes.
Section 5.03 TRUST ACCOUNTS; TRUST ACCOUNT PROPERTY.
(a) CONTROL OF TRUST ACCOUNTS. Each of the Trust Accounts (or
interests therein) established hereunder has been pledged by the Issuer to the
Indenture Trustee under the Indenture and shall be subject to the lien of the
Indenture. In addition to the provisions hereunder, each of the Trust Accounts
shall also be established and maintained pursuant to the Indenture. Amounts
distributed from each Trust Account in accordance with the Indenture and this
Agreement shall be released from the lien of the Indenture upon such
distribution thereunder or hereunder. Subject to SECTIONS 5.01 and 5.02 hereof,
the Indenture Trustee shall possess all right, title and interest in and to all
funds on deposit from time to time in the Trust Accounts (other than the
Certificate Distribution Account) and in all proceeds thereof (including all
income thereon) and all such funds, investments, proceeds and income shall be
part of the Trust Account Property and the Owner Trust Estate. If, at any time,
any Trust Account ceases to be an Eligible Account, the Indenture Trustee (or
the Servicer on its behalf) shall, within ten Business Days (or such longer
period, not to exceed 30 calendar days, as to which each Rating Agency may
consent) (i) establish a new Trust Account as an Eligible Account, (ii)
terminate the ineligible Trust Account, and (iii) transfer any cash and
investments from such ineligible Trust Account to such new Trust Account.
With respect to the Trust Accounts (other than the Certificate
Distribution Account), the Indenture Trustee agrees, by its acceptance hereof,
that each such Trust Account shall be subject to the sole and exclusive custody
and control of the Indenture Trustee for the benefit of the Securityholders and
the Issuer, as the case may be, and the Indenture Trustee shall have sole
signature and withdrawal authority with respect thereto.
In addition to this Agreement and the Indenture, the Certificate
Distribution Account established hereunder shall also be subject to and
established and maintained in accordance with the Owner Trust Agreement. Subject
to rights of the Indenture Trustee and the Noteholders hereunder and under the
Indenture, the Owner Trustee shall possess for the benefit of the
Certificateholders all right, title and interest in all funds on deposit from
time to time in the Certificate Distribution Account and in all proceeds thereof
(including all income thereon) and all such funds, investments, proceeds and
income shall be part of the Trust Account Property and the Owner Trust Estate.
Subject to the rights of the Indenture Trustee and the Noteholders, the Owner
Trustee agrees, by its acceptance hereof, that such Certificate Distribution
Account shall be subject to the sole and exclusive custody and control of the
Owner Trustee for the benefit of the Issuer and the parties entitled to payments
and distributions therefrom, including, without limitation, the
Certificateholders, and the Owner Trustee shall have sole signature and
withdrawal authority with respect to the Certificate Distribution Account.
Notwithstanding the preceding, the distribution of amounts from the Certificate
Distribution Account in accordance with SECTION 5.01(C)(II) hereof shall also be
made for the benefit of the Indenture Trustee (including without limitation with
respect to its duties under the Indenture and this Agreement relating to the
Owner Trust Estate), and the Indenture Trustee (in its capacity as Indenture
Trustee) shall have the right, but not the obligation, to take custody and
control of the Certificate Distribution Account and to cause the distribution of
amounts therefrom in the event that the Owner Trustee fails to distribute such
amounts in accordance with subsections (c) and (d) of SECTION 5.02.
In accordance with SECTIONS 5.01 and 5.02 hereof, the Servicer or
the Master Servicer shall have the power, revocable by the Indenture Trustee or
by the Owner Trustee with the consent of the Indenture Trustee, to instruct the
Indenture Trustee or Owner Trustee to make withdrawals and payments from the
Trust Accounts for the purpose of permitting the Servicer, the Master Servicer
or the Issuer to carry out their respective duties hereunder or permitting the
Indenture Trustee or Owner Trustee to carry out their respective duties herein
or under the Indenture, the Owner Trust Agreement or the Grantor Trust
Agreement, as applicable.
(b) (i) INVESTMENT OF FUNDS. So long as no Event of Default shall
have occurred and be continuing, the funds held in any Trust Account may
be invested by the Indenture Trustee (to the extent practicable and
consistent with any requirements of the Code) in Permitted Investments,
except that funds held in the Note Payment Account shall be invested in
Permitted Investments as directed by the Master Servicer and funds held in
the Collection Account shall be invested in Permitted Investments as
directed by Empire Subservicer, if it is acting as Subservicer, otherwise
the Servicer. Any directions for investment of funds in any Trust Account
shall be made in writing or by telephone or facsimile transmission
confirmed in writing. In any case, funds in any Trust Account must be
available for withdrawal without penalty, and any Permitted Investments
must mature or otherwise be available for withdrawal, not later than the
Business Day immediately preceding the Payment Date next following the
date of such investment (except that Permitted Investments representing
investments in the Indenture Trustee or the Master Servicer may mature on
the Payment Date) and shall not be sold or disposed of prior to its
maturity subject to subsection (b)(2) of this Section. All interest and
any other investment earnings on amounts or investments held in any Trust
Account shall be deposited into such Trust Account immediately upon
receipt by the Indenture Trustee. All Permitted Investments in which funds
in any Trust Account (other than the Certificate Distribution Account) are
invested must be held by or registered in the name of "U.S. Bank National
Association, as Indenture Trustee, in trust for the Empire Funding Home
Loan Asset Backed Notes, Series 1999-1." While the Indenture Trustee holds
the Certificate Distribution Account, on behalf of the Owner Trustee, all
Permitted Investments in which funds in the Certificate Distribution
Account are invested shall be held by or registered in the name of "U.S.
Bank National Association, on behalf of the Owner Trustee, in trust for
the Empire Funding Home Loan Asset Backed Notes, Series 1999-1."
(ii) INSUFFICIENCY AND LOSSES IN TRUST ACCOUNTS. If any
amounts are needed for disbursement from any Trust Account held by or on
behalf of the Indenture Trustee and sufficient uninvested funds are not
available to make such disbursement, the Indenture Trustee shall cause to
be sold or otherwise converted to cash a sufficient amount of the
investments in such Trust Account. The Indenture Trustee shall not be
liable for any investment loss or other charge resulting therefrom, unless
such loss or charge is caused by the failure of the Indenture Trustee or
Owner Trustee, respectively, to perform in accordance with this SECTION
5.03 hereof or the Indenture Trustee is the obligor under the Permitted
Investment and has defaulted thereon.
If any losses are realized in connection with any investment in any
Trust Account pursuant to this Agreement and the Indenture, then either Empire
Subservicer, if acting as Subservicer, pursuant to SECTION 5.01(B)(I) hereof,
otherwise the Servicer, in the case of the Collection Account, or the Master
Servicer pursuant to SECTION 5.01(C) hereof, in the case of the Note Payment
Account, shall deposit the amount of such losses (to the extent not offset by
income from other investments in such Trust Account) into such Trust Account
immediately upon the realization of such loss. All interest and any other
investment earnings on amounts held in any Trust Account (other than the Note
Payment Account and the Collection Account) shall be the income of the Issuer
(or, when there is a single beneficial owner of a Residual Interest Certificate,
such owner), and for federal and state income tax purposes the Issuer (or such
single beneficial owner) shall be the owner (or beneficial owner in the case of
the Collection Account).
(c) NO LIABILITY FOR LOSSES. Subject to Section 6.01 of the
Indenture, the Indenture Trustee shall not in any way be held liable by reason
of any insufficiency in any Trust Account held by the Indenture Trustee
resulting from any investment loss on any Permitted Investment included therein
(except to the extent that the Indenture Trustee is the obligor and has
defaulted thereon).
(d) DELIVERY OF TRUST ACCOUNT PROPERTY. With respect to the Trust
Account Property, the Indenture Trustee acknowledges and agrees that:
(i) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Accounts, subject to the
last sentence of subsection (a) of this SECTION 5.03; and each such
Eligible Account shall be subject to the sole and exclusive dominion,
custody and control of the Indenture Trustee; and, without limitation on
the foregoing, the Indenture Trustee shall have sole signature authority
with respect thereto;
(ii) any Trust Account Property described in clause (a) of the
definition of "Delivery" in SECTION 1.1 hereof shall be delivered to and
maintained by the Indenture Trustee in accordance with the definition of
"Delivery" in SECTION 1.1 hereof and shall be held, pending maturity or
disposition, solely by or on behalf of the Indenture Trustee; and
(iii) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered to and maintained by the Indenture Trustee
in accordance with paragraph (b) of the definition of "Delivery" in
SECTION 1.1 hereof.
Section 5.04 ALLOCATION OF LOSSES. (a) In the event that Net
Liquidation Proceeds, Insurance Proceeds or Released Property Proceeds on a
Liquidated Home Loan are less than the related Principal Balance plus accrued
interest thereon, or any Obligor makes a partial payment of any Monthly Payment
due on a Home Loan, such Net Liquidation Proceeds, Insurance Proceeds, Released
Property Proceeds or partial payment shall be applied to payment of the related
Debt Instrument, first, to interest accrued at the Home Loan Interest Rate and,
then, to principal.
(b) On any Payment Date, any Allocable Loss Amounts shall be applied
to the reduction of the Class Principal Balances of the Class B-2, the Class B-1
Notes, the Class M-1 Notes and Class M-2 Notes in accordance with the Allocable
Loss Amount Priority; PROVIDED HOWEVER, on the date on which the Class Principal
Balance of the Class B-2 Notes would be reduced to zero by the allocation of
losses on the Home Loans pursuant to this SECTION 5.04(B), such losses will be
applied to reduce the Subordinate Noteholders' Monthly Interest Payment Amount
with respect to the Class B-2 Notes to zero prior to the allocation of such
losses to the Class Principal Balance of the Class B-1 Notes.
ARTICLE VI
STATEMENTS AND REPORTS; WITHHOLDING
Section 6.01 STATEMENTS.
(a) No later than each Determination Date, the Servicer shall
deliver to the Indenture Trustee and the Master Servicer by facsimile, the
receipt and legibility of which shall be confirmed by telephone, and with hard
copy thereof to be delivered no later than one (1) Business Day after such
Determination Date, the Servicer's Monthly Remittance Report, setting forth the
date of such Report (day, month and year), the name of the Issuer (i.e., "Empire
Funding Home Loan Owner Trust 1999-1"), the Series designation of the Notes
(i.e., "Series 1999-1") and the date of this Agreement, all in substantially the
form set out in Exhibit B hereto. Furthermore, no later than each Determination
Date, the Servicer shall deliver to the Master Servicer and the Indenture
Trustee a magnetic tape or computer disk providing such information regarding
the Servicer's activities in servicing the Home Loans during the related Due
Period as the Indenture Trustee or the Master Servicer may reasonably require.
The Servicer also shall deliver any Loan Liquidation Reports pursuant to SECTION
4.10(A) hereof.
(b) On each Payment Date, Indenture Trustee shall distribute, based
on information provided by the Servicer, a monthly statement (the "PAYMENT
STATEMENT") to the Depositor, the Master Servicer, the Securityholders and the
Rating Agencies, stating the date of original issuance of the Notes (day, month
and year), the name of the Issuer (i.e., "Empire Funding Home Loan Owner Trust
1999-1"), the Series designation of the Notes (i.e., "Series 1999-1"), the date
of this Agreement and the following information:
(i) the Available Collection Amount, Available Payment
Amount, the Regular Payment Amount and the Excess Spread for the
related Payment Date;
(ii) the Class Principal Balance of each Class of Notes before
and after giving effect to payments made to the holders of such Notes on
such Payment Date, and the Pool Principal Balance as of the first and last
day of the related Due Period;
(iii) the Class Factor with respect to each Class of the Notes
then outstanding;
(iv) the amount of principal, if any, and interest to be
distributed to each Class of Notes on the related Payment Date;
(v) with respect to each Class of Notes, the Optimal
Principal Balance thereof;
(vi) the Overcollateralization Deficiency Amount or any
Overcollateralization Reduction Amount, and any amount to be distributed
to the Noteholders or the holders of the Residual Interest on such Payment
Date;
(vii) the Master Servicer Compensation, the Servicing
Compensation, the Empire Subservicing Compensation, the Indenture Trustee
Fee, the Grantor Trustee Fee, the Owner Trustee Fee and, the Custodian
Fee, if any, for such Payment Date;
(viii) the Overcollateralization Amount on such Payment Date,
the Overcollateralization Target Amount as of such Payment Date, the Net
Loan Losses incurred during the related Due Period, the cumulative Net
Loan Losses as of such Payment Date, the Allocable Loss Amount for such
Payment Date, the application of the Allocable Loss Amount Priority for
such Payment Date and any amounts of Loss Reimbursement Deficiency
reimbursed on such Payment Date;
(ix) the weighted average maturity of the Home Loans and the
weighted average Home Loan Interest Rate of the Home Loans;
(x) certain performance information, including, without
limitation, delinquency and foreclosure information with respect to the
Home Loans and 60-Day Delinquency Amounts (as defined in the definition of
"Six-Month Rolling Delinquency Average" in SECTION 1.01 hereof), as set
forth in the Servicer's Monthly Remittance Report;
(xi) the number of and aggregate Principal Balance of all Home
Loans in foreclosure proceedings and the percent of the aggregate
Principal Balances of such Home Loans to the aggregate Principal Balances
of all Home Loans, all as of the close of business on the last day of the
related Due Period;
(xii) the number of and the aggregate Principal Balance of the
Home Loans in bankruptcy proceedings and the percent of the aggregate
Principal Balances of such Home Loans to the aggregate Principal Balances
of all Home Loans, all as of the close of business on the last day of the
related Due Period;
(xiii) the number of Foreclosure Properties, the aggregate
Principal Balance of the related Home Loans, the book value of such
Foreclosure Properties and the percent of the aggregate Principal Balances
of such Home Loans to the aggregate Principal Balances of all Home Loans,
all as of the close of business on the last day of the related Due Period;
(xiv) during the related Due Period (and cumulatively, from
the Closing Date through the most current Due Period), the number and
aggregate Principal Balance of Home Loans for each of the following: (A)
that became Defaulted Home Loans, (B) that became Liquidated Home Loans,
(C) that became Deleted Home Loans pursuant to SECTION 3.05 hereof as a
result of such Deleted Home Loans being Defective Home Loans, and (D) that
became Deleted Home loans pursuant to SECTION 3.05 hereof as a result of
such Deleted Home Loans being Defaulted Home Loans or a Home Loan in
default or imminent default, including the foregoing amounts by loan type
(i.e., Combination Loans, or Debt Consolidation Loans);
(xv) the scheduled principal payments and the principal
prepayments received with respect to the Home Loans during the Due Period;
and
(xvi) the number and aggregate Principal Balance of Home Loans
that were 30, 60 or 90 days Delinquent as of the close of business on the
last day of the related Due Period.
In the case of information furnished to Securityholders pursuant to
subclause (b)(iv) of this SECTION 6.01, the amounts shall be expressed as a
dollar amount per Note with a $1,000 Denomination.
All reports prepared by the Indenture Trustee of the withdrawals
from and deposits in the Collection Account will be based in whole or in part
upon the information provided to the Indenture Trustee by the Servicer, and the
Indenture Trustee may fully rely upon and shall have no liability with respect
to such information provided by the Servicer.
(c) Within a reasonable period of time after the end of each
calendar year, the Indenture Trustee shall prepare and distribute to each Person
who at any time during the calendar year was a Noteholder such information as is
reasonably necessary to provide to such Person a statement containing the
information set forth in subclauses (b)(iv) of this SECTION 6.01, aggregated for
such calendar year or applicable portion thereof during which such Person was a
Noteholder.
(d) On each Payment Date, the Indenture Trustee shall forward to The
Depository Trust Company and to the holders of the Residual Interest
Certificates a copy of the Payment Statement in respect of such Payment Date and
a statement setting forth the amounts actually distributed to such holders of
the Residual Interest Certificates on such Payment Date, together with such
other information as the Indenture Trustee deems necessary or appropriate.
(e) Within a reasonable period of time after the end of each
calendar year, the Indenture Trustee shall prepare and distribute to each Person
who at any time during the calendar year was a holder of Residual Interest
Certificates, if requested in writing by such Person, a statement containing the
information provided pursuant to the previous paragraph aggregated for such
calendar year or applicable portion thereof during which such Person was a
holder of Residual Interest Certificates.
(f) The Indenture Trustee shall forward to each Noteholder and each
holder of a Residual Interest Certificate, during the term of this Agreement,
such periodic, special or other reports, including information tax returns or
reports required with respect to the Notes and the Residual Interest
Certificates, as shall be necessary, reasonable, or appropriate with respect to
the Noteholders or the holders of Residual Interest Certificates, or otherwise
with respect to the purposes of this Agreement, all such reports or information
in the case of the Residual Interest Certificates to be provided by and in
accordance with such applicable instructions and directions as the Majority
Residual Interestholders may reasonably require.
(g) Reports and computer tapes furnished by the Servicer and the
Indenture Trustee and the Master Servicer pursuant to this Agreement shall be
deemed confidential and of a proprietary nature and shall not be copied or
distributed except in connection with the purposes and requirements of this
Agreement. No Person entitled to receive copies of such reports or tapes shall
use the information therein for the purpose of soliciting the customers of the
Depositor or the Servicer or for any other purpose except as set forth in this
Agreement.
Section 6.02 WITHHOLDING. The Indenture Trustee shall comply with
all requirements of the Code, and applicable state and local laws, with respect
to the withholding from any payments made to any Noteholder of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith, giving due effect to any applicable
exemptions from such withholding and effective certifications or forms provided
by the recipient. Any amounts withheld pursuant to this SECTION 6.02 shall be
deemed to have been paid to the Noteholders for all purposes of this Agreement
or the Indenture.
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 DUE-ON-SALE; DUE-ON-ENCUMBRANCE.
(a) If any Home Loan contains a provision, in the nature of a
"due-on-sale" clause, which by its terms:
(i) provides that such Home Loan shall (or may at the related
lender's option) become due and payable upon the sale or other transfer of
an interest in any related Property; or
(ii) provides that such Home Loan may not be assumed without
the consent of the related lender in connection with any such sale or
other transfer,
then, for so long as such Home Loan is included in the Grantor Trust, the
Servicer, on behalf of the Grantor Trustee, shall exercise any right the Grantor
Trustee may have as the lender of record with respect to such Home Loan (x) to
accelerate the payments thereon or (y) to withhold its consent to any such sale
or other transfer, in a manner consistent with the Accepted Servicing Procedures
and subject to SECTION 4.10 or 7.01(C) hereof.
(b) If any Home Loan contains a provision in the nature of a
"due-on- encumbrance" clause, which by its terms:
(i) provides that such Home Loan shall (or may at the related
lender's option) become due and payable upon the creation of any lien or
other encumbrance on any related Property; or
(ii) requires the consent of the related lender to the
creation of any such lien or other encumbrance on any related Property,
then, for so long as such Home Loan is included in the Grantor Trust, the
Servicer, on behalf of the Grantor Trustee, shall exercise any right the Grantor
Trustee may have as the lender of record with respect to such Home Loan (x) to
accelerate the payments thereon or (y) to withhold its consent to the creation
of any such lien or other encumbrance, in a manner consistent with the Accepted
Servicing Standards and subject to SECTION 4.10 or 7.01(C) hereof.
(c) If a Home Loan does not contain a "due-on-sale" clause or such
clause is reasonably believed by the Servicer not to be enforceable under
applicable law, then the Servicer shall enter into an assumption and
modification agreement with the Person to whom any related Property has been or
is about to be conveyed, pursuant to which such person becomes liable under the
Debt Instrument and, unless prohibited by applicable law or the Home Loan
documents, the Obligor remains liable thereon. In accordance with the Accepted
Servicing Procedures, the Servicer shall have the authority to enter into a
substitution of liability agreement with such person, pursuant to which the
original Obligor is released from liability and such Person is substituted as
Obligor and becomes liable under the Debt Instrument. The Servicer shall notify
the Custodian and the Master Servicer that any such substitution or assumption
agreement has been completed by forwarding to the Custodian a true and correct
copy or, if available, an original of such substitution or assumption agreement,
which copy or original shall be added by the Custodian to the related Grantor
Trustee's Home Loan File. In connection with any assumption or substitution
agreement entered into pursuant to this SECTION 7.01(C) hereof, the Servicer
shall not change the Home Loan Interest Rate or the Monthly Payment, defer or
forgive the payment of principal or interest, reduce the outstanding principal
amount or extend the final maturity date on such Home Loan. Any fee collected by
the Servicer for consenting to any such conveyance or entering into an
assumption or substitution agreement shall be retained by or paid to the
Servicer as additional Servicing Compensation.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
(d) Nothing in this SECTION 7.01 shall constitute a waiver of the
Grantor Trustee's right to receive notice of any assumption of a Home Loan, any
sale or other transfer of the related Property or the creation of any lien or
other encumbrance with respect to such Property.
Section 7.02 RELEASE OF HOME LOAN FILES.
(a) If with respect to any Home Loan:
(i) the outstanding Principal Balance of such Home Loan plus
all interest accrued thereon shall have been paid;
(ii) the Servicer shall have received, in escrow, payment in
full of such Home Loan in a manner customary for such purposes;
(iii) such Home Loan has become a Defective Loan and has been
repurchased or a Qualified Substitute Home Loan has been conveyed to the
Grantor Trustee pursuant to SECTION 3.05 hereof;
(iv) such Home Loan or the related Foreclosure Property has
been sold in connection with the termination of the Issuer and the Grantor
Trust pursuant to SECTION 11.01 hereof; or
(v) such Home Loan is a Defaulted Home Loan or a Liquidated
Home Loan that is liquidated or disposed of pursuant to SECTION 4.10
hereof or the related Foreclosure Property has been sold pursuant to
SECTION 4.11 hereof;
then in each such case, the Servicer shall deliver an Officer's Certificate to
the effect that the Servicer has complied with all of its obligations under this
Agreement with respect to such Home Loan and requesting that the Grantor Trustee
release to the Servicer the related Grantor Trustee's Home Loan File. Upon the
receipt of such Officer's Certificate, the Grantor Trustee shall, within five
Business Days or such shorter period as may be required by applicable law,
release, or cause the applicable Custodian to release (unless such Grantor
Trustee's Home Loan File has previously been released), the related Grantor
Trustee's Home Loan File to the Servicer and execute and deliver such
instruments of transfer or assignment, in each case without recourse, as shall
be necessary to vest ownership of such Home Loan in the Servicer or such other
Person as may be specified in such certificate, the forms of any such instrument
to be appended to such certificate.
(b) If a temporary release of the Grantor Trustee's Home Loan File
is necessary or appropriate for the servicing (which may include any
modification or foreclosure) of any Home Loan, then upon the request of the
Servicer pursuant to SECTION 3(B) of the Custodial Agreement the Grantor Trustee
shall release the related Grantor Trustee's Home Loan File (or any requested
portion thereof) to the Servicer.
Section 7.03 SERVICING COMPENSATION.
As compensation for its services hereunder, the Servicer shall be
entitled to receive from the Collection Account the Servicing Fee (which
Servicing Fee is an expense of the Grantor Trust), out of which the Servicer
shall pay any subservicing fees to any Subservicer (in the event Empire
Subservicer is not acting as Subservicer hereunder). Subject to SECTION 4.05(B),
additional servicing compensation in the form of assumption fees, prepayment
penalties, modification fees, and other administrative fees, insufficient funds
charges, amounts remitted pursuant to SECTION 7.01 hereof and late payment
charges shall be part of the Servicing Compensation payable to the Servicer
hereunder and shall be paid either by the Servicer retaining such additional
servicing compensation prior to deposit in the Collection Account pursuant to
SECTION 5.01(B)(I) hereof or, if deposited in the Collection Account, as part of
the Servicing Compensation withdrawn from the Note Payment Account pursuant to
SECTION 5.01(C)(I) hereof. In addition, if Empire Subservicer is not the
Subservicer, additional compensation attributable to the investment earnings
from the Collection Account shall be part of the Servicing Compensation payable
to the Servicer pursuant to SECTION 5.01(C)(I) hereof.
The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided for herein. The Servicer
also agrees to pay pursuant to SECTION 10.02 hereof all reasonable costs and
expenses incurred by any successor servicer, the Master Servicer or the Grantor
Trustee in replacing the Servicer upon the resignation of the Servicer or
termination of the Servicer in the event of a default by the Servicer in the
performance of its duties under the terms and conditions of this Agreement,
including, without limitation, any costs or expenses associated with the
complete transfer of all servicing data and the completion, correction or
manipulation of such servicing data as may be required by the successor servicer
to correct any errors or insufficiencies in the servicing data or otherwise to
enable the successor servicer to service the Home Loans properly and
effectively.
Section 7.04 STATEMENT AS TO COMPLIANCE AND FINANCIAL STATEMENTS.
The Servicer and the Subservicer shall deliver to the Indenture Trustee, the
Grantor Trustee, the Depositor, the Master Servicer and the Rating Agencies not
later than 90 days following the end of each fiscal year of the Servicer
(beginning in 1999), an Officer's Certificate stating that (i) a review of the
activities of the Servicer or the Subservicer, as applicable, during the
preceding year and of performance under this Agreement has been made under such
officer's supervision and (ii) to the best of such officer's knowledge, based on
such review, the Servicer or the Subservicer, as applicable, has fulfilled all
of its obligations under this Agreement throughout such year, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof and what action
the Servicer or Subservicer, as applicable, proposes to take with respect
thereto.
Contemporaneously with the submission of the Officer's Certificate
required by the preceding paragraph, the Servicer shall deliver to the Indenture
Trustee, the Master Servicer and the Grantor Trustee a copy of its annual
audited financial statements prepared in the ordinary course of business. The
Servicer shall, upon the request of the Depositor, deliver to such party any
unaudited quarterly financial statements of the Servicer.
The Servicer shall also furnish and certify to the requesting party
such other information as to (i) its organization, activities and personnel
relating to the performance of the obligations of the Servicer hereunder, (ii)
its financial condition, (iii) the Home Loans and (iv) the performance of the
obligations of any Subservicer under the related Subservicing Agreement, in each
case as the Indenture Trustee, the Grantor Trustee, the Master Servicer or the
Depositor may reasonably request from time to time.
Section 7.05 INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT. Not
later than 90 days following the end of each fiscal year of the Servicer or,
Empire Subservicer if it is acting as Subservicer (beginning with fiscal year
1999), the Servicer or Empire Subservicer, as applicable, at the expense of
each, shall cause any nationally recognized firm of Independent Certified Public
Accountants (which may also render other services to the Servicer) to furnish a
statement to the Indenture Trustee, the Grantor Trustee, the Rating Agencies,
the Master Servicer and the Depositor to the effect that such firm has examined
certain documents and records relating to the servicing of the Home Loans under
this Agreement or of mortgage loans under pooling or sale and servicing
agreements (including the Home Loans and this Agreement) substantially similar
to one another (such statement to have attached thereto a schedule setting forth
the pooling or sale and servicing agreements covered thereby) and that, on the
basis of such examination conducted substantially in compliance with the Uniform
Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FHLMC, such firm confirms that such servicing has been
conducted in compliance with such pooling or sale and servicing agreements
except for such significant exceptions or errors in records that, in the opinion
of such firm, the Uniform Single Attestation Program for Mortgage Bankers or the
Attestation Program for Mortgages serviced for FHLMC requires it to report, each
of which errors and omissions shall be specified in such statement. In rendering
such statement, such firm may rely, as to matters relating to direct servicing
of mortgage loans by Subservicers, upon comparable statements for examinations
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
FHLMC (rendered within one year of such statement) of independent public
accountants with respect to the related Subservicer.
Section 7.06 RIGHT TO EXAMINE SERVICER RECORDS. Each Securityholder,
Grantor Trust Holder, the Indenture Trustee, the Grantor Trustee, the Owner
Trustee, Depositor, the Master Servicer and each of their respective agents
shall have the right upon reasonable prior notice, during normal business hours
and as often as reasonably required, to examine, audit and copy, at the expense
of the Person making such examination, any and all of the books, records or
other information of the Servicer (including without limitation any
Subservicer), whether held by the Servicer or by another on behalf of the
Servicer, which may be relevant to the performance or observance by the Servicer
of the terms, covenants or conditions of this Agreement. In the case of the
supervisory agents and examiners of the Issuer, the Indenture Trustee, the
Grantor Trustee, the Owner Trustee, the Grantor Trust Holder, the Master
Servicer and the Securityholders, access to the documentation regarding the Home
Loans required by applicable state and federal regulations shall be afforded
without charge but only upon reasonable request and during normal business hours
at the offices of the Servicer designated by it.
The Servicer also agrees to make available on a reasonable basis to
the Depositor, the Securityholders or any prospective Securityholder a
knowledgeable financial or accounting officer for the purpose of answering
reasonable questions respecting recent developments affecting the Servicer or
the financial statements of the Servicer and to permit the Depositor, the
Securityholders and any prospective Securityholder to inspect the Servicer's
servicing facilities during normal business hours for the purpose of satisfying
the Depositor, the Securityholders and such prospective Securityholder that the
Servicer has the ability to service the Home Loans in accordance with this
Agreement.
Each Securityholder, Grantor Trust Holder, the Indenture Trustee,
the Grantor Trustee, the Master Servicer and the Owner Trustee agree that any
information obtained pursuant to the terms of this Agreement shall be held
confidential.
Section 7.07 REPORTS TO THE INDENTURE TRUSTEE; COLLECTION ACCOUNT
STATEMENTS. If the Collection Account is not maintained with the Indenture
Trustee, then not later than 25 days after each Record Date, the Servicer shall
forward to the Indenture Trustee and the Master Servicer, a statement, certified
by a Servicing Officer, setting forth the status of the Collection Account as of
the close of business on the preceding Record Date and showing, for the period
covered by such statement, the aggregate of deposits into the Collection Account
for each category of deposit specified in SECTION 5.01(B)(I) hereof, the
aggregate of withdrawals from the Collection Account for each category of
withdrawal specified in SECTION 5.01(B)(II) and (III) hereof, in each case, for
the related Due Period.
Section 7.08 FINANCIAL STATEMENTS. The Servicer understands that, in
connection with the transfer of the Notes, Noteholders may request that the
Servicer make available to the Noteholders and to prospective Noteholders annual
audited financial statements of the Servicer for one or more of the most
recently completed five fiscal years for which such statements are available,
which request shall not be unreasonably denied.
ARTICLE VIII
(RESERVED)
ARTICLE IX
THE SERVICER
Section 9.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
(a) The Servicer shall indemnify each Transferor, the Owner Trustee,
the Issuer, the Grantor Trust, the Depositor, the Grantor Trustee, the Master
Servicer and the Indenture Trustee (each an "INDEMNIFIED PARTY") and hold
harmless each of them against any and all claims, losses, damages, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and
other costs and expenses resulting from any claim, demand, defense or assertion
based on or grounded upon, or resulting from, a breach of any of the Servicer's
representations and warranties and covenants contained in this Agreement or in
any way relating to the failure of the Servicer to perform its duties and
service the Home Loans in compliance with the terms of this Agreement.
(b) The Empire Subservicer shall indemnify each Transferor, the
Owner Trustee, the Issuer, the Grantor Trust, the Depositor, the Grantor
Trustee, the Master Servicer, the Servicer and the Indenture Trustee (each an
"INDEMNIFIED PARTY") and hold harmless each of them against any and all claims,
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
breach of any of the Empire Subservicer's representations and warranties and
covenants contained in this Agreement or in any way relating to the failure of
the Empire Subservicer to perform its duties and service the Home Loans in
compliance with the terms of this Agreement.
(c) Each Transferor, the Depositor, the Grantor Trustee, the Owner
Trustee, the Master Servicer or the Indenture Trustee, as the case may be, shall
promptly notify the Servicer if a claim is made by a third party with respect to
a breach of any of the Servicer's representations and warranties and covenants
contained in this Agreement or in any way relating to the failure of the
Servicer to perform its duties and service the Home Loans in compliance with the
terms of this Agreement. The Servicer shall promptly notify the Indenture
Trustee, the Grantor Trustee, the Owner Trustee, the Master Servicer and the
Depositor of any claim of which it has been notified pursuant to this SECTION
9.01 by a Person other than the Depositor, and, in any event, shall promptly
notify the Depositor of its intended course of action with respect to any claim.
(d) The Servicer shall be entitled to participate in and, upon
notice to the Indemnified Party, assume the defense of any such action or claim
in reasonable cooperation with, and with the reasonable cooperation of, the
Indemnified Party. The Indemnified Party will have the right to employ its own
counsel in any such action in addition to the counsel of the Servicer, but the
fees and expenses of such counsel will be at the expense of such Indemnified
Party, unless (i) the employment of counsel by the Indemnified Party at its
expense has been authorized in writing by the Servicer, (ii) the Servicer has
not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, or
(iii) the named parties to any such action or proceeding (including any
impleaded parties) include both the Servicer and one or more Indemnified
Parties, and the Indemnified Parties shall have been advised by counsel that
there may be one or more legal defenses available to them which are different
from or additional to those available to the Servicer. The Servicer shall not be
liable for any settlement of any such claim or action unless the Servicer shall
have consented thereto or be in default on its obligations hereunder. Any
failure by an Indemnified Party to comply with the provisions of this SECTION
9.01 shall relieve the Servicer of liability only if such failure is materially
prejudicial to the position of the Servicer and then only to the extent of such
prejudice.
(e) The provisions of this Section 9.01 shall survive the
replacement of the Servicer pursuant to a Servicer Termination Event; provided,
that no successor servicer shall be liable for (or required to indemnify any
party for) any act or omission of any predecessor servicer. None of the
Transferors, the Depositor, the Servicer, the Master Servicer or any of the
directors, officers, employees or agents of the Transferors, the Depositor, the
Master Servicer or the Servicer, or members or Affiliates of the Depositor shall
be under any liability to the Issuer, the Securityholders or any other Person
for any action taken, or for refraining from the taking of any action, in good
faith pursuant to this Agreement, or for errors in judgment; PROVIDED, HOWEVER,
that this provision shall not protect any Transferor, the Depositor, the
Servicer, the Master Servicer or any such person against the remedies provided
herein for the breach of any warranties, representations or covenants made
herein, or against any specific liability imposed on any Transferor, the
Depositor, the Master Servicer or the Servicer herein, or against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of the duties of the Servicer, the Master
Servicer, the Depositor or any Transferor, as the case may be, or by reason of
reckless disregard of the obligations and duties of the Servicer, the Master
Servicer, the Depositor or any Transferor, as the case may be, hereunder. Each
Transferor, the Depositor, the Servicer, the Master Servicer and any director,
officer, employee or agent of each Transferor, the Depositor or the Servicer, or
any member or Affiliate of the Depositor may rely in good faith on any document
of any kind which, prima facie, is properly executed and submitted by any Person
respecting any matters arising hereunder.
Section 9.02 MERGER OR CONSOLIDATION OF THE SERVICER.
The Servicer shall keep in full effect its existence, rights and
franchises as a corporation, and will obtain and preserve its authorization or
qualification to do business as a foreign corporation and maintain, or cause an
affiliate previously approved by the Master Servicer to maintain, such other
licenses and permits in each jurisdiction necessary to protect the validity and
enforceability of this Agreement or any of the Home Loans and to perform its
duties under this Agreement; PROVIDED, HOWEVER, that the Servicer may merge or
consolidate with any other corporation upon the satisfaction of the conditions
set forth in the following paragraph.
Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall be an Eligible Servicer and shall be the successor of the
Servicer, as applicable hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding. The Servicer shall send notice of any such merger,
conversion, consolidation or succession to the Indenture Trustee, the Grantor
Trustee, the Master Servicer and the Issuer.
Section 9.03 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.
The Servicer and any director, officer, employee or agent of the
Servicer may rely on any document of any kind which it in good faith reasonably
believes to be genuine and to have been adopted or signed by the proper
authorities respecting any matters arising hereunder. Subject to the terms of
SECTION 9.01 hereof, the Servicer shall have no obligation to appear with
respect to, prosecute or defend any legal action which is not incidental to the
Servicer's duty to service the Home Loans in accordance with this Agreement.
Section 9.04 SERVICER NOT TO RESIGN; ASSIGNMENT.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except (a) with the consent of the Grantor Trustee, the Master
Servicer and the Indenture Trustee or (b) upon determination that its duties
hereunder are no longer permissible under applicable law. Any such determination
pursuant to clause (b) of the preceding sentence permitting the resignation of
the Servicer shall be evidenced by an independent opinion of counsel to such
effect delivered (at the expense of the Servicer) to the Grantor Trustee, the
Master Servicer and the Indenture Trustee. No resignation of the Servicer shall
become effective until the Master Servicer, the Grantor Trustee or a successor
servicer, appointed pursuant to the provisions of SECTION 10.02 hereof and
satisfying the requirements of SECTION 4.07 hereof with respect to the
qualifications of a successor servicer, shall have assumed the Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.
Except as expressly provided herein, the Servicer shall not assign
or transfer any of its rights, benefits or privileges hereunder to any other
Person, or delegate to or subcontract with, or authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed by
the Servicer hereunder and any agreement, instrument or act purporting to effect
any such assignment, transfer, delegation or appointment shall be void.
Pursuant to SECTION 10.02 hereof, the Servicer agrees to cooperate
with any successor servicer and the Master Servicer in effecting the transfer of
the Servicer's servicing responsibilities and rights hereunder pursuant to the
first paragraph of this SECTION 9.04, including, without limitation, the
transfer to such successor of all relevant records and documents (including any
Home Loan Files in the possession of the Servicer) and all amounts received with
respect to the Home Loans and not otherwise permitted to be retained by the
Servicer pursuant to this Agreement. In addition, the Servicer, at its sole cost
and expense, shall prepare, execute and deliver any and all documents and
instruments to the successor servicer including all Home Loan Files in its
possession and do or accomplish all other acts necessary or appropriate to
effect such termination and transfer of servicing responsibilities.
Section 9.05 RELATIONSHIP OF SERVICER TO THE GRANTOR TRUST AND THE
GRANTOR TRUSTEE. The relationship of the Servicer (and of any successor to the
Servicer as servicer under this Agreement) to the Grantor Trust and the Grantor
Trustee under this Agreement is intended by the parties hereto to be that of an
independent contractor and not of a joint venturer, agent or partner of the
Issuer or the Indenture Trustee.
Section 9.06 SERVICER MAY OWN SECURITIES. Each of the Servicer and
any Affiliate of the Servicer may in its individual or any other capacity become
the owner or pledgee of Securities with the same rights as it would have if it
were not the Servicer or an Affiliate thereof except as otherwise specifically
provided herein. Securities so owned by or pledged to the Servicer or such
Affiliate shall have an equal and proportionate benefit under the provisions of
this Agreement, without preference, priority, or distinction as among all of the
Securities; PROVIDED, HOWEVER, that any Securities owned by the Servicer or any
Affiliate thereof, during the time such Securities are owned by them, shall be
without voting rights for any purpose set forth in this Agreement. The Servicer
shall notify the Indenture Trustee promptly after it or any of its Affiliates
becomes the owner or pledgee of a Security.
ARTICLE X
DEFAULT
Section 10.01 (a) EVENTS OF DEFAULT. In case one or more of the
following Events of Default by the Servicer shall occur and be continuing, that
is to say:
(i) any failure by the Servicer to deposit in the Collection
Account in accordance with SECTION 5.01(B) hereof any payments in respect
of the Home Loans received by the Servicer no later than the second
Business Day following the day on which such payments were received; or
(ii) failure by the Servicer duly to observe or perform, in
any material respect, any other covenants, obligations or agreements of
the Servicer as set forth in this Agreement, which failure continues
unremedied for a period of 30 days after the date on which written notice
of such failure, requiring the same to be remedied and stating that such
notice is a "Notice of Default" hereunder, shall have been given (a) to
the Servicer by the Indenture Trustee, the Master Servicer, the Grantor
Trustee or the Issuer, or (b) to the Servicer, the Indenture Trustee, the
Master Servicer, the Grantor Trustee or the Issuer by the Majority
Noteholders; PROVIDED, HOWEVER, if an event set forth in this clause (b)
is caused solely by Empire Subservicer, it shall not be an Event of
Default unless the Servicer fails to cure such Event of Default within 30
days of the occurrence thereof; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force, undischarged or
unstayed for a period of 60 days; or
(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or substantially all of
the Servicer's property; or
(v) the Servicer shall admit in writing its inability to pay
its debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(vi) the Majority Noteholders, the Master Servicer or the
Grantor Trust Holder shall determine, in their or its reasonable judgment
and based upon published reports (including wire services), which they or
it reasonably believes in good faith to be reliable, that:
(A) the Servicer has experienced a material adverse
change in its business, assets, liabilities, operations, condition
(financial or otherwise) or prospects,
(B) the Servicer has defaulted on any of its
material obligations,
(C) the Servicer is no longer able to discharge its
duties under this Agreement, or
(D) the Servicer has ceased to conduct its business
in the ordinary course,
PROVIDED, HOWEVER, that the Servicer shall have five Business Days from the
receipt of any notice of default under this Subsection to cure such Event of
Default by providing the foregoing parties with written assurances that, in a
reasonable and good faith manner, substantiate the financial and operational
well-being of the Servicer and adequately refute the occurrence of a material
adverse change, including, without limitation, information, reports or written
assurances obtained from certain of its lenders; or
(vii) as of any Determination Date, the total Expected Loan
Loss Percentage (as defined below) exceeds (1) up to the fifth (5th)
anniversary of the March 31, 1999 Cut-Off Date, 22.0%, or (2) thereafter
33.0% (where the "EXPECTED LOAN LOSS PERCENTAGE" shall be the sum of (A)
the cumulative Net Loan Losses divided by the Original Pool Principal
Balance, plus (B) 25% of the aggregate Principal Balance of the Home Loans
which are then more than 30 but less than 60 days delinquent divided by
the Original Pool Principal Balance, plus (C) 50% of the aggregate
Principal Balance of the Home Loans which are then more than 60 but less
than 90 days delinquent divided by the Original Pool Principal Balance,
plus (D) 100% of the aggregate Principal Balance of the Home Loans which
are then more than 90 days delinquent divided by the Original Pool
Principal Balance); PROVIDED, HOWEVER, if an event set forth in this
clause (vii) occurs while Empire Funding is the Subservicer, it shall not
be an Event of Default unless the Servicer fails to cure such Event of
Default within 90 days after the occurrence thereof;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Indenture Trustee, the Grantor Trustee, the Master
Servicer, the Grantor Trust Holder or the Majority Noteholders, by notice in
writing to the Servicer (and to the Indenture Trustee and the Master Servicer,
if notice is given by the Majority Noteholders) may, in addition to whatever
rights such Person may have at law or in equity to damages, including injunctive
relief and specific performance, terminate all the rights and obligations of the
Servicer under this Agreement and in and to the Home Loans and the proceeds
thereof, as Servicer under this Agreement. Upon receipt by the Servicer of such
written notice, and the appointment of and acceptance of appointment by a
successor servicer, all authority, power, obligations and responsibilities of
the Servicer under this Agreement, whether with respect to the Home Loans or
otherwise, shall pass to, be transferred to, and be vested in either: (i) a
successor servicer selected by the Master Servicer and reasonably acceptable to
the Indenture Trustee; (ii) the Master Servicer, if a successor servicer cannot
be retained in a timely manner; or (iii) the Grantor Trustee, if the Master
Servicer cannot act as the successor servicer, as evidenced by an Opinion of
Counsel to such effect that is delivered by the Master Servicer, at its expense,
to the Grantor Trustee and the Indenture Trustee. Notwithstanding anything to
the contrary contained herein, in no event shall any such succession impair,
modify or terminate any of the rights of Empire Subservicer hereunder.
Upon the termination of the Servicer and transfer to a successor,
the successor servicer, the Master Servicer or the Grantor Trustee, as
applicable, is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, any and all documents and
other instruments and do or cause to be done all other acts or things necessary
or appropriate to effect the purposes of such notice of termination, including,
but not limited to, the transfer and endorsement or assignment of the Home Loans
and related documents. The Servicer agrees to cooperate with the successor
servicer in effecting the termination of the Servicer's responsibilities and
rights hereunder, including, without limitation, the transfer to the successor
servicer for administration by it of all amounts which shall at the time be
credited by the Servicer to each Collection Account or thereafter received with
respect to the Home Loans.
(b) REALLOCATION OF SERVICING FEE AND ESTABLISHMENT OF ESCROW
ACCOUNT. Upon the occurrence of a Servicer Termination Event, then, until the
servicing of the Home Loans hereunder is transferred to a successor servicer,
the Master Servicer or the Grantor Trustee, as applicable, the Servicing Fee
otherwise payable to the Servicer hereunder shall be paid as follows: (1) first,
to the Servicer (A) if Empire Subservicer is acting as Subservicer hereunder, an
amount equal to the portion of the Servicing Fee otherwise payable to the
Servicer based on a fee rate of 0.25% (25 basis points) or (B) if Empire
Subservicer is not acting as Subservicer hereunder, an amount equal to the
portion of the Servicing Fee as calculated based on a fee rate of 0.4825% (48.25
basis points); (2) second, to the Indenture Trustee any remaining amount for the
deposit into an escrow or reserve account for the transfer of servicing for the
Home Loans, until the balance of such account equals $350,000; and (3) third, to
the Servicer any remaining amount. Such escrow or reserve account shall be an
Eligible Account and a Trust Account, and, except as otherwise provided herein,
such account shall be established and maintained by the Indenture Trustee in a
manner that is consistent with the Collection Account hereunder. In connection
with the transfer of servicing to a successor servicer, amounts on deposit in
such escrow account shall be remitted pursuant to Section 10.02 hereof;
provided, that any amounts remaining in such escrow account after all payments
have been made pursuant to Section 10.02 hereof shall be paid to the terminated
Servicer.
The Servicer hereby grants to the Indenture Trustee a security
interest in all of the Servicer's right, title and interest in, to and under any
escrow account established pursuant to this SECTION 10.01(B) and all monies
deposited therein from time to time, as security for its obligations under this
Agreement; and this Agreement constitutes a security agreement under applicable
law.
Section 10.02 MASTER SERVICER TO ACT; APPOINTMENT OF Successor.
(a) APPOINTMENT OF SUCCESSOR. On and after the date of a Servicer
Termination Event (including a Servicer termination pursuant to SECTION 10.01
hereof, or a resignation of the Servicer as evidenced by an Opinion of Counsel
or accompanied by the consents required by SECTION 9.04 hereof, or a removal
pursuant to this Article X), then, subject to SECTION 4.07 hereof, the Master
Servicer, within 60 days of the occurrence of such Servicer Termination Event,
shall appoint a successor servicer to be the successor in all respects to the
Servicer in its capacity as Servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof; PROVIDED, HOWEVER, that the successor
servicer shall not be liable for any actions of any servicer prior to it. If a
successor servicer cannot be retained in a timely manner, then the Master
Servicer shall act as the successor servicer, or if the Master Servicer cannot
act as the successor servicer (as evidenced by an Opinion of Counsel delivered
by the Master Servicer to the Grantor Trustee and the Indenture Trustee), then
the Grantor Trustee shall act as successor servicer. Notwithstanding the
foregoing, the parties hereto agree that the Master Servicer, in its capacity as
successor servicer, immediately will assume all of the obligations of the
Servicer to make Servicing Advances and the Master Servicer will assume the
other duties of the Servicer as soon as practicable, but in no event later than
60 days after a Servicer Termination Event. If the Master Servicer or the
Grantor Trustee, as applicable, assumes the responsibilities of the Servicer
pursuant to this SECTION 10.02, then the Master Servicer or the Grantor Trustee,
as applicable, will make reasonable efforts consistent with applicable law to
become licensed, qualified and in good standing in each Property State the laws
of which require licensing or qualification in order to perform its obligations
as Servicer hereunder or, alternatively, shall retain an agent that is so
licensed, qualified and in good standing in any such Property State.
Notwithstanding the foregoing, the Master Servicer, in its capacity as successor
Servicer shall not be responsible for the lack of information and/or documents
that it cannot obtain through reasonable efforts.
If the Master Servicer or the Grantor Trustee, as applicable, serves
as successor servicer, then the Master Servicer or the Grantor Trustee, as
applicable, in such capacity shall not be liable for any servicing of the Home
Loans prior to its date of appointment and shall not be subject to any
obligations to repurchase any Home Loans. The successor servicer shall be
obligated to make Servicing Advances hereunder.
Any successor servicer, the Master Servicer or the Grantor Trustee
shall be reimbursed for all reasonable costs and expenses incurred in connection
with the appointment of the successor servicer and the replacement of the
Servicer following a Servicer Termination Event hereunder, which reimbursement
shall be paid (1) first, by the Indenture Trustee to the extent that funds are
available in the escrow account established pursuant to SECTION 10.01(B) hereof,
and (2) second, by the Servicer pursuant to SECTION 7.03 hereof, to the extent
of any unpaid reimbursement.
(b) SUCCESSOR SERVICER COMPENSATION. The compensation of any
successor servicer (including, without limitation, the Grantor Trustee) so
appointed shall be the Servicing Fee, together with other Servicing Compensation
provided for herein. As compensation therefor, the successor servicer appointed
pursuant to the following paragraph, shall be entitled to all funds relating to
the Home Loans which the Servicer would have been entitled to receive from the
Note Payment Account pursuant to SECTION 5.01(C) hereof as if the Servicer had
continued to act as servicer hereunder, together with any other Servicing
Compensation.
(c) TERMINATION FEE TO PRIOR SERVICER. In the event the Grantor
Trustee or the Master Servicer is required to solicit bids to appoint a
successor servicer, the Grantor Trustee or the Master Servicer, as applicable,
shall solicit, by public announcement, bids from Eligible Servicers. Such public
announcement shall specify that the successor servicer shall be entitled to the
full amount of the Servicing Fee and Servicing Compensation provided for herein.
The Grantor Trustee or the Master Servicer, as applicable, shall deduct from any
sum received by the Grantor Trustee or the Master Servicer, as applicable, from
the successor servicer to the Servicer in respect of the sale, transfer and
assignment of the servicing rights for the Home Loans the sum of (i) all costs
and expenses of any public announcement and of any sale, transfer and assignment
of such servicing rights, (ii) the amount of any unpaid Servicing Fees and
unreimbursed Servicing Advances made by the Grantor Trustee or the Master
Servicer, as applicable, and (iii) all costs and expenses of the Grantor Trustee
or the Master Servicer, as applicable, incurred in connection with the
appointment of the successor servicer. After such deductions, the remainder of
such sum shall be paid by the Grantor Trustee or the Master Servicer, as
applicable, to the Servicer at the time of such sale, transfer and assignment to
the Servicer's successor. Except as provided in this Section 10.02(c), the
Servicer shall not be entitled to any other termination fee, if it is terminated
pursuant to Section 10.01 hereof but shall be entitled to any accrued and unpaid
Servicing Compensation to the date of termination.
(d) COOPERATION OF PRIOR SERVICER WITH SUCCESSION. The Master
Servicer, the Grantor Trustee, any Custodian, the Servicer and any such
successor servicer shall take such action, consistent with this Agreement, as
shall be necessary to effect any such succession. Any collections received by
the Servicer after removal or resignation shall be endorsed by it to the Grantor
Trustee or the Indenture Trustee, as assignee of the Grantor Trust Certificate,
and remitted directly to the Grantor Trustee or the Indenture Trustee or, at the
direction of the Grantor Trustee or the Indenture Trustee, to the successor
servicer. The Servicer agrees to cooperate with the Master Servicer, the Grantor
Trustee and any successor servicer, as applicable, in effecting the termination
of the Servicer's servicing responsibilities and rights hereunder and shall
promptly provide the Master Servicer, the Grantor Trustee or such successor
servicer, as applicable, all documents and records reasonably requested by it to
enable it to assume the Servicer's functions hereunder and shall promptly also
transfer to the Grantor Trustee or the Indenture Trustee, as assignee of the
Grantor Trust Certificate, or such successor servicer, as applicable, all
amounts which then have been or should have been deposited in any Trust Account
maintained by the Servicer or which are thereafter received with respect to the
Home Loans.
(e) EFFECTIVENESS OF APPOINTMENT. Neither the Master Servicer, the
Grantor Trustee nor any other successor servicer, as applicable, shall be held
liable by reason of any failure to make, or any delay in making, any payment or
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Servicer hereunder. No appointment of a successor to the Servicer
hereunder shall be effective until (A) the Depositor, the Grantor Trust Holder
and the Master Servicer shall have consented thereto, EXCEPT in the case of the
appointment of the Master Servicer or the Grantor Trustee as successor to the
Servicer (when no consent shall be required), and (B) written notice of such
proposed appointment shall have been provided by the Master Servicer or the
Grantor Trustee, as applicable, to the Indenture Trustee, each Grantor Trust
Holder, the Owner Trustee and the Depositor.
Pending appointment of a successor to the Servicer hereunder, the
Master Servicer or the Grantor Trustee, as applicable, shall act as servicer
hereunder as provided herein. In connection with such appointment and
assumption, the Master Servicer or the Grantor Trustee, as applicable, may make
such arrangements for the compensation of such successor servicer out of
payments on the Home Loans as it and such successor servicer shall agree;
PROVIDED, HOWEVER, that no such compensation shall be in excess of that
permitted the Servicer pursuant to SECTION 7.03 hereof, together with other
Servicing Compensation as provided herein.
Section 10.03 WAIVER OF DEFAULTS.
The Majority Noteholders, on behalf of all Noteholders and with the
prior consent of the Master Servicer, may waive any events permitting removal of
the Servicer as servicer pursuant to this Article X; PROVIDED, HOWEVER, that the
Majority Noteholders may not waive a default in making a required payment on a
Note or distribution on a Residual Interest Certificate without the consent of
the related Noteholder or holder of the Residual Interest Certificate. Upon any
waiver of a past default, such default shall cease to exist and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived.
Section 10.04 ACCOUNTING UPON TERMINATION OF SERVICER.
Upon termination of the Servicer under this Article X, the Servicer
shall, at its own expense:
(a) deliver to its successor or, if none shall yet have been
appointed, to the Indenture Trustee the funds in any Trust Account maintained by
the Servicer;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Master Servicer or the Grantor Trustee, as applicable, all
Home Loan Files and related documents and statements held by it hereunder and a
Home Loan portfolio computer tape and other necessary data for the servicing of
the Home Loans hereunder in compatible computer readable format;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Master Servicer, the Grantor Trustee, the Indenture Trustee,
the Grantor Trust Holder and the Securityholders a full accounting of all funds,
including a statement showing the Monthly Payments collected by it and a
statement of monies held in trust by it for payments or charges with respect to
the Home Loans;
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Home Loans to its successor and to more fully and definitively
vest in such successor all rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer under this Agreement; and
(e) make available on a reasonable basis Servicing Officers and
other servicing personnel for the purpose of facilitating the transfer of
servicing hereunder to the successor servicer.
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION.
This Agreement shall terminate upon notice to the Indenture Trustee
of either: (a) the later of (i) the satisfaction and discharge of the Indenture
and the provisions thereof or (ii) the disposition of all funds with respect to
the last Home Loan and the remittance of all funds due hereunder and the payment
of all amounts due and payable to the Servicer, the Indenture Trustee, the
Grantor Trustee, the Owner Trustee, the Issuer, the Master Servicer and any
Custodian; or (b) the mutual consent of the Servicer, Empire Subservicer (so
long as it is acting as Subservicer hereunder), the Master Servicer, the
Depositor, each Transferor and all Securityholders in writing.
Section 11.02 OPTIONAL TERMINATION. On or after any Payment Date on
which the Pool Principal Balance declines to 10% or less of the Original Pool
Principal Balance, then the Majority Residual Interestholders may, at their
option, effect an early termination of the Issuer and the Grantor Trust. On or
after any Payment Date on which the Pool Principal Balance declines to 5% or
less of the Original Pool Principal Balance, then the Master Servicer may, at
its option, effect an early termination of the Issuer and the Grantor Trust. The
Majority Residual Interestholders or the Master Servicer, as applicable, shall
effect such early termination by providing prior notice thereof to the Indenture
Trustee, the Grantor Trustee, the Master Servicer, and Owner Trustee and by
purchasing all of the Home Loans from the Grantor Trustee at a purchase price,
payable in cash, equal to or greater than the Termination Price. The expense of
any Independent appraiser required under this SECTION 11.02 shall be a
nonreimbursable expense of Majority Residual Interestholders or the Master
Servicer, as applicable.
Any such early termination by the Majority Residual Interestholders
or the Master Servicer shall be accomplished by depositing into the Collection
Account on the third Business Day prior to the Payment Date on which the
purchase is to occur the amount of the Termination Price to be paid. The
Termination Price and any amounts then on deposit in the Collection Account
(other than any amounts not required to have been deposited therein pursuant to
SECTION 5.01(B)(I) hereof and any amounts withdrawable therefrom by the
Indenture Trustee pursuant to SECTION 5.01(B)(III) hereof) shall be transferred
to the Note Payment Account pursuant to SECTION 5.01(B)(II) hereof as a
terminating distribution in respect of the Grantor Trust Certificate pursuant to
SECTION 5.01 of the Grantor Trust Agreement for payment to Noteholders on the
succeeding Payment Date; and any amounts received with respect to the Home Loans
and Foreclosure Properties subsequent to the Due Period immediately preceding
such final Payment Date shall belong to the purchaser thereof. For purposes of
calculating the Available Payment Amount for such final Payment Date, amounts
transferred to the Note Payment Account immediately preceding such final Payment
Date shall in all cases be deemed to have been received during the related Due
Period, and amounts so transferred shall be applied pursuant to SECTION 5.01(D)
and (E) hereof.
Section 11.03 NOTICE OF TERMINATION. Notice of termination of this
Agreement or of early redemption and termination of the Issuer and the Grantor
Trust shall be sent (i) by the Indenture Trustee to the Noteholders in
accordance with section 10.02 of the Indenture, (ii) by the Owner Trustee to the
Certificateholders in accordance with section 9.1(d) of the Owner Trust
Agreement, and (iii) by the Grantor Trustee to the Grantor Trust Holder in
accordance with SECTION 7.02 of the Grantor Trust Agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 ACTS OF NOTEHOLDERS.
Except as otherwise specifically provided herein, whenever action,
consent or approval of the Securityholders is required under this Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Securityholders if the Majority
Securityholders agree to take such action or give such consent or approval.
Section 12.02 AMENDMENT.
(a) This Agreement may be amended from time to time by the
Depositor, the Servicer, the Master Servicer, Empire Subservicer (so long as it
is acting as Subservicer hereunder), if the Subservicer hereunder, the
Transferors, the Indenture Trustee, the Guarantor, the Grantor Trustee and the
Issuer by written agreement with notice thereof to the Securityholders, without
the consent of any of the Securityholders, to cure any error or ambiguity, to
correct or supplement any provisions hereof which may be defective or
inconsistent with any other provisions hereof or to add any other provisions
with respect to matters or questions arising under this Agreement; PROVIDED,
HOWEVER, that such action will not adversely affect in any material respect the
interests of the Securityholders. An amendment described above shall be deemed
not to adversely affect in any material respect the interests of the
Securityholders if either (i) an Opinion of Counsel is obtained to such effect
or (ii) the party requesting the amendment obtains a letter from each of the
Rating Agencies confirming that the amendment, if made, would not result in the
downgrading or withdrawal of the rating then assigned by the respective Rating
Agency to any Class of Notes then outstanding.
(b) This Agreement may also be amended from time to time by the
Depositor, the Servicer, the Master Servicer, Empire Subservicer (so long as it
is acting as Subservicer hereunder), if the Subservicer hereunder, the
Transferors, the Indenture Trustee, the Guarantor, the Grantor Trustee and the
Issuer by written agreement, with the prior written consent of the Majority
Noteholders, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, or of modifying
in any manner the rights of the Securityholders; PROVIDED, HOWEVER, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
collections of payments on Home Loans or distributions which are required to be
made on any Security, without the consent of the holders of 100% of each Class
of Notes affected thereby, (ii) adversely affect in any material respect the
interests of the holders of any Class of Notes in any manner other than as
described in clause (i), without the consent of the holders of 100% of such
Class of Notes, or (iii) reduce the percentage of any Class of Notes, the
consent of which is required for any such amendment, without the consent of the
holders of 100% of such Class of Notes.
(c) It shall not be necessary for the consent of Noteholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the
Issuer, the Grantor Trustee and the Indenture Trustee shall be entitled to
receive and rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement. The Issuer, the Grantor
Trustee and the Indenture Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Issuer's own rights, duties or immunities
of the Issuer, the Grantor Trustee or the Indenture Trustee, as the case may be,
under this Agreement.
Section 12.03 RECORDATION OF AGREEMENT.
To the extent permitted by applicable law, this Agreement, or a
memorandum thereof if permitted under applicable law, is subject to recordation
in all appropriate public offices for real property records in all of the
counties or other comparable jurisdictions in which any or all of the Properties
are situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Servicer at the Noteholders' expense on
direction of the Majority Noteholders but only when accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially affects
the interests of the Noteholders or is necessary for the administration or
servicing of the Home Loans.
Section 12.04 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until
terminated as herein provided.
Section 12.05 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 12.06 NOTICES.
All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by overnight mail, certified mail or registered mail, postage prepaid,
to: (i) in the case of the Depositor, PaineWebber Mortgage Acceptance
Corporation IV, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq., or such other addresses as may hereafter be
furnished to the Securityholders and the other parties hereto in writing by the
Depositor; (ii) in the case of the Issuer, at Empire Funding Home Loan Owner
Trust 1999-1, c/o Wilmington Trust Company, ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Administration, or such other address as may hereafter be furnished to the
Securityholders and the other parties hereto; (iii) in the case of Empire
Funding, Empire Funding Corp., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or such other address as may hereafter be furnished
to the Securityholders and the other parties hereto in writing by Empire
Funding; (iv) in the case of ContiMortgage, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Counsel; (v) in the case of ULG, United
Lending Group, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
Chief Counsel; (vi) in the case of the Indenture Trustee and Grantor Trustee,
U.S. Bank National Association, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇; Attention: Structured Finance/Empire Funding 1999-1; (vii) in the case of
the Master Servicer, Norwest Bank Minnesota, National Association, ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Master Servicing Manager
(Empire Funding Series 1999-1); (viii) in the case of the Guarantor,
ContiFinancial Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
Chief Counsel, and (ix) in the case of the Securityholders, as set forth in the
applicable Note Register.
Any such notices shall be deemed to be effective with respect to any
party hereto upon the receipt of such notice by such party, except that notices
to the Securityholders shall be effective upon mailing or personal delivery.
Section 12.07 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.
Section 12.08 NO PARTNERSHIP.
Nothing herein contained shall be deemed or construed to create any
partnership or joint venture between the parties hereto and the services of each
of Empire Subservicer and the Servicer shall be rendered as an independent
contractor.
Section 12.09 COUNTERPARTS.
This Agreement may be executed in one or more counterparts and by
the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same Agreement.
Section 12.10 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
Servicer, each Transferor, the Depositor, the Indenture Trustee, the Grantor
Trustee, the Issuer, the Noteholders, the Master Servicer and the Grantor Trust
Holder and their respective successors and permitted assigns.
Section 12.11 HEADINGS.
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
Section 12.12 ACTIONS OF SECURITYHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Securityholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Securityholders in person or by agent
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Depositor, the Servicer, Empire Subservicer (so long as it is
acting as Subservicer hereunder) or the Issuer. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Depositor, the Servicer
and the Issuer if made in the manner provided in this SECTION 12.12.
(b) The fact and date of the execution by any Securityholder of any
such instrument or writing may be proved in any reasonable manner which the
Depositor, the Servicer or the Issuer deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Securityholder shall bind every holder of every
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Depositor, the Servicer, the Indenture Trustee or the Issuer in reliance
thereon, whether or not notation of such action is made upon such Security.
(d) The Depositor, the Servicer, the Indenture Trustee or the Issuer
may require additional proof of any matter referred to in this SECTION 12.12 as
it shall deem necessary.
Section 12.13 REPORTS TO RATING AGENCIES. (a) The Indenture
Trustee shall provide to each Rating Agency copies of statements, reports and
notices, to the extent received or prepared in connection herewith, as
follows:
(i) copies of amendments to this Agreement;
(ii) notice of any substitution or repurchase of any Home
Loans;
(iii) notice of any termination, replacement, succession,
merger or consolidation of the Servicer, the Master Servicer, Empire
Subservicer, any Custodian or the Issuer;
(iv) notice of final payment on the Notes;
(v) notice of any Event of Default;
(vi) copies of the annual independent accountants' report
delivered pursuant to SECTION 7.05 hereof, and copies of any compliance
reports delivered by the Servicer including under SECTION 7.04 hereof; and
(vii) copies of any Payment Date Statement pursuant to SECTION
6.01(B) hereof.
(b) With respect to the requirement of the Indenture Trustee to
provide statements, reports and notices to the Rating Agencies, such statements,
reports and notices shall be delivered to the Rating Agencies at the following
addresses: (i) if to S&P, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention:
Residential Mortgage Group; and (ii) if to Duff & ▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: MBS Monitoring.
Section 12.14 HOLDERS OF THE RESIDUAL INTEREST CERTIFICATES. (a) Any
sums to be distributed or otherwise paid hereunder or under the Owner Trust
Agreement to the holders of the Residual Interest Certificates shall be paid to
such holders pro rata based on their percentage holdings in the Residual
Interest;
(b) Where any act or event hereunder is expressed to be subject to
the consent or approval of the holders of the Residual Interest Certificates,
such consent or approval shall be capable of being given by the holder or
holders of not less than 51% of the Residual Interest in aggregate.
Section 12.15 YEAR 2000 COMPLIANCE. Each of the Master Servicer, the
Servicer, the Empire Subservicer and the Indenture Trustee certify that they
shall (i) implement modifications to their respective existing computer systems
to the extent required to cause them to be year 2000 ready or (ii) acquire
computer systems that are year 2000 ready in each case prior to January 1, 2000.
Section 12.16 TRANSFERORS TO INDEMNIFY INDENTURE TRUSTEE AND OWNER
TRUSTEE. Each Transferor agrees to indemnify (i) the Indenture Trustee pursuant
to Section 6.07 of the Indenture and (ii) the Owner Trustee pursuant to Section
8.2 of the Owner Trust Agreement.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the Issuer, the Depositor, each Transferor, the
Servicer, the Master Servicer, the Grantor Trustee and the Indenture Trustee
have caused their names to be signed by their respective officers thereunto duly
authorized, as of the day and year first above written, to this Sale and
Servicing Agreement.
EMPIRE FUNDING HOME LOAN OWNER TRUST
1999-1,
By: Wilmington Trust Company, not in
its individual capacity but solely
as Owner Trustee
By: ___________________________________
Name:
Title:
PAINEWEBBER MORTGAGE ACCEPTANCE
CORPORATION IV, as Depositor
By: ___________________________________
Name:
Title:
EMPIRE FUNDING CORP., as Transferor
and Subservicer
By: ___________________________________
Name:
Title:
CALIFORNIA LENDING GROUP, INC., d/b/a
UNITED LENDING GROUP,
as Transferor
By: ___________________________________
Name:
Title:
CONTIMORTGAGE CORPORATION,
as Transferor and Servicer
By: ___________________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Master Servicer
By: ___________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION, as
Indenture Trustee and Grantor
Trustee
By: ___________________________________
Name:
Title:
CONTIFINANCIAL CORPORATION, as
Guarantor
By: ___________________________________
Name:
Title:
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this _____
day of _______, 1999 personally appeared _______________, known to me to be a
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said WILMINGTON TRUST
COMPANY, not in its individual capacity but in its capacity as Owner Trustee of
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1 as Issuer, and that she executed the
same as the act of such corporation for the purpose and consideration therein
expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF WILMINGTON TRUST COMPANY, this the
____ day of _______, 1999.
_______________________________________
Notary Public, State of _______________
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __
day of _______, 1999 personally appeared _______________________, known to me to
be the person and officer whose name is subscribed to the foregoing instrument
and acknowledged to me that the same was the act of the said PAINEWEBBER
MORTGAGE ACCEPTANCE CORPORATION IV, as the Depositor, and that he/she executed
the same as the act of such corporation for the purposes and consideration
therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF EMPIRE FUNDING CORP., this the ____
day of ________, 1999.
_______________________________________
Notary Public, State of _______________
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __
day of ______, 1999 personally appeared ____________________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as the Indenture Trustee and
Grantor Trustee, and that she executed the same as the act of such entity for
the purposes and consideration therein expressed, and in the capacity therein
stated.
GIVEN UNDER MY HAND AND SEAL OF U.S. BANK NATIONAL ASSOCIATION,
this the __ day of ______, 1999.
_______________________________________
Notary Public, State of _______________
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __
day of ______, 1999 personally appeared ____________________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said EMPIRE FUNDING CORP.,
as the Transferor and the Subservicer, and that she executed the same as the act
of such entity for the purposes and consideration therein expressed, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF EMPIRE FUNDING CORP., this the __
day of ______, 1999.
_______________________________________
Notary Public, State of _______________
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __
day of ______, 1999 personally appeared ____________________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said CALIFORNIA LENDING
GROUP, INC., d/b/a UNITED LENDING GROUP, as Transferor, and that she executed
the same as the act of such entity for the purposes and consideration therein
expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF CALIFORNIA LENDING GROUP, INC.,
d/b/a UNITED LENDING GROUP, this the __ day of ______ , 1999.
_______________________________________
Notary Public, State of _______________
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __
day of ______, 1999 personally appeared ____________________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said CONTIMORTGAGE
CORPORATION, as Transferor and Servicer, and that she executed the same as the
act of such entity for the purposes and consideration therein expressed, and in
the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF CONTIMORTGAGE CORPORATION, this the
__ day of ______, 1999.
_______________________________________
Notary Public, State of _______________
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __
day of ______, 1999 personally appeared ____________________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as the Master Servicer, and that she executed the same as
the act of such entity for the purposes and consideration therein expressed, and
in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, this the __ day of ______, 1999.
_______________________________________
Notary Public, State of _______________
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __
day of ______, 1999 personally appeared ____________________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said CONTIFINANCIAL
CORPORATION, as Guarantor, and that she executed the same as the act of such
entity for the purposes and consideration therein expressed, and in the capacity
therein stated.
GIVEN UNDER MY HAND AND SEAL OF CONTIFINANCIAL CORPORATION, this the
__ day of ______, 1999.
_______________________________________
Notary Public, State of _______________
EXHIBIT A
HOME LOAN SCHEDULE
INFORMATION IS ON FILE WITH THE DEPOSITOR AT
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
EXHIBIT B
Form of Servicer's Monthly Remittance Report to Indenture Trustee
Servicer Monthly Activity Report Empire Funding Corp.
Empire Funding Home Loan Owner Trust 1998-3 Report Date:
Home Loan Asset Backed Notes, Series 1998-3 Report Period:
-----------------------------------------------------------------------------------------------
LOAN ACTIVITY INTEREST PRINCIPAL TOTALS
------------ ------------- ----------
Aggregate Beginning UPB 0.00
============
Loans- Repurchased 0.00
Scheduled Payments Collected 0.00 0.00 0.00
Unscheduled Payments Collected
Curtailments 0.00 0.00
Pay-offs 0.00 0.00 0.00
Prepayments 0.00 0.00 0.00
Delinquencies 0.00 0.00 0.00
Other 0.00 0.00 0.00
----------- ------------ ----------
Total Funds Collected 0.00 0.00 0.00
----------- ------------ ----------
Principal Losses 0.00
Beginning Balance of New Liquidated Loans 0.00
Aggregate Ending Balance 0.00
===========
-----------------------------------------------------------------------------------------------
POOL SUMMARY
Beginning Period
Weighted Average Coupon 0.000%
------------
Weighted Average Maturity 0
------------
Remaining Number of Loans 0
------------
Ending Period
Weighted Average Coupon 0.000%
------------
Weighted Average Remaining Term 0
------------
Remaining Number of Loans 0
------------
FUNDS DEPOSITED
Total P & I Funds Collected 0.00
------------
Total P & I Funds Collected on Liquidated Loans 0.00
------------
Total Collection Funds Deposited 0.00
============
Total Repurchased Funds Deposited 0.00
------------
Servicing Fees Due Empire Funding Corporation 0.00
------------
--------------------------------------------------------------------------------
DELINQUENCY AND FORECLOSURE INFORMATION
# of Accounts % Amount %
------------- ------ ---------- ------
30-59 Days Delinquent 0 0.000% 0.00 0.000%
60-89 Days Delinquent 0 0.000% 0.00 0.000%
90 or more Days Delinquent 0 0.000% 0.00 0.000%
Bankruptcy Filed 0 0.000% 0.00 0.000%
Real Estate Owned 0 0.000% 0.00 0.000%
Loans in Foreclosure 0 0.000% 0.00 0.000%
NET LOSS INFORMATION
Current Collection Period
Net Losses (Gains) 0.00
Write Off Mortgage Loans 0.00
Gross Principal Losses on Write Off Loans 0.00
Write Off Proceeds 0.00
Write Off Expenses 0.00
Cumulative
Net Losses (Gains) 0.00
Write Off Mortgage Loans 0.00
Gross Principal Losses on Write Off Loans 0.00
Write Off Proceeds 0.00
Write Off Expenses 0.00
EXHIBIT C
Form of Loan Liquidation Report
Customer Name:
Account No.:
Original Principal Balance:
1. Type of Liquidation (REO disposition/charge-off/short pay-off) __________
Date last paid __________
a. Foreclosure
Date of Foreclosure __________
Date of REO __________
Date of REO Disposition __________
Property Sale Price/Estimated Market Value at disposition $ __________
b. Settlement (short pay-off and collection actions)
Date of Settlement Payment __________
c. Defaulted Loan Sale
Date of Sale __________
d. Charge-off or Bankruptcy
Date of Charge-off or Bankruptcy Discharge __________
2. Liquidation Proceeds
Principal Prepayment $ __________
Property Sale Proceeds $ __________
Insurance Proceeds $ __________
Settlement Payment Loan Sale Proceeds $ __________
Other (Itemize) $ __________
Total Proceeds $ __________
3. Liquidation Expenses
Servicing Advances $ __________
Servicing Fees $ __________
Other Servicing Compensation $ __________
Collection Agent or Attorney's Fees $ __________
Total Advances $ __________
4. Net Liquidation Proceeds $ __________
(Item 2 minus Item 3)
5. Principal Balance of Mortgage Loan $ __________
6. Loss, if any (Item 5 minus Item 4) $ __________
EXHIBIT D
SCHEDULE OF EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
1. Exceptions to Representation and Warranty 3.04(b) - The following Home
Loans are 30 or more days past due as of the Cut-Off Date:
PRINCIPAL BALANCE
HOME LOAN NUMBER AS OF CUT-OFF DATE TRANSFEROR
---------------- ------------------ ----------
1000279 $19,882.72 Empire Funding
1000401 21,113.43 Empire Funding
1001051 43,771.89 Empire Funding
2424026 33,105.70 Empire Funding
2465124 24,859.38 Empire Funding
2554836 19,523.75 Empire Funding
2677806 18,016.52 Empire Funding
2709104 20,129.58 Empire Funding
2728370 49,429.61 Empire Funding
2892405 16,301.33 Empire Funding
2915634 44,055.10 Empire Funding
2964171 24,132.34 Empire Funding
2986671 13,144.32 Empire Funding
3083659 22,529.49 Empire Funding
3095177 20,602.49 Empire Funding
3103986 38,171.96 Empire Funding
3129217 42,877.81 Empire Funding
3143139 29,539.87 Empire Funding
3144291 29,897.03 Empire Funding
3166651 39,636.06 Empire Funding
3241513 42,062.02 Empire Funding
3673431 16,722.52 Empire Funding
3834330 52,902.99 Empire Funding
3891992 19,782.84 Empire Funding
3958752 16,981.50 Empire Funding
4160516 27,302.46 Empire Funding
4493925 34,666.60 Empire Funding
4521583 17,847.21 Empire Funding
4549849 29,910.64 Empire Funding
4578861 23,921.78 Empire Funding
4600453 14,766.80 Empire Funding
4622224 14,678.15 Empire Funding
4660370 12,967.52 Empire Funding
4694888 34,913.36 Empire Funding
4695164 16,801.57 Empire Funding
4763839 29,795.25 Empire Funding
4764062 24,592.19 Empire Funding
4766113 34,276.78 Empire Funding
4774131 22,945.72 Empire Funding
4776371 24,031.05 Empire Funding
4776497 32,918.80 Empire Funding
4788448 22,587.26 Empire Funding
4788554 34,904.77 Empire Funding
4788901 33,509.46 Empire Funding
4788910 37,394.22 Empire Funding
4790131 44,852.88 Empire Funding
4790471 24,333.61 Empire Funding
4790667 15,661.28 Empire Funding
4790694 27,160.91 Empire Funding
4790701 21,940.34 Empire Funding
4791023 16,926.31 Empire Funding
4815962 42,293.63 Empire Funding
4820340 34,880.18 Empire Funding
4824827 34,624.18 Empire Funding
4859898 34,595.38 Empire Funding
4887929 44,442.27 Empire Funding
4893244 45,842.46 Empire Funding
4893878 33,990.48 Empire Funding
4918263 30,629.63 Empire Funding
4936555 24,921.45 Empire Funding
4937714 26,911.46 Empire Funding
4938045 19,786.69 Empire Funding
4954277 34,634.21 Empire Funding
4998140 29,958.73 Empire Funding
5021068 35,327.75 Empire Funding
5025803 32,663.15 Empire Funding
5029337 24,782.10 Empire Funding
5041563 14,968.11 Empire Funding
5054353 34,907.55 Empire Funding
5115644 64,915.62 Empire Funding
5121245 20,515.17 Empire Funding
5139012 21,866.43 Empire Funding
5141884 20,979.40 Empire Funding
5161512 34,909.77 Empire Funding
5176855 30,637.53 Empire Funding
4522626 26,889.29 Empire Funding
4580910 34,875.11 Empire Funding
3195813 37,257.85 Empire Funding
4657801 69,502.99 Empire Funding
4581866 21,423.17 Empire Funding
0006626121 38,657.01 ContiMortgage
0006798904 31,507.14 ContiMortgage
0007091119 56,683.55 ContiMortgage
0007107907 34,899.50 ContiMortgage
0005711734 44,838.14 ContiMortgage
9800005962 29,872.36 ContiMortgage
9800007691 29,753.68 ContiMortgage
9800008565 24,940.82 ContiMortgage
9800009213 34,731.31 ContiMortgage
9800009643 24,970.02 ContiMortgage
9800010726 14,764.48 ContiMortgage
9800011083 34,896.84 ContiMortgage
9800011484 29,893.86 ContiMortgage
▇▇▇▇▇▇▇▇▇▇ 34,394.85 ContiMortgage
2. Exception to Representation and Warranty 3.04(m) - The following Home
Loans do not require a Monthly Payment which is sufficient to fully
amortize the original principal balance over the original term and to pay
interest at the related Home Loan Interest Rate:
PRINCIPAL BALANCE
HOME LOAN NUMBER AS OF CUT-OFF DATE TRANSFEROR
---------------- ------------------ ----------
▇▇▇▇▇▇▇▇▇▇ $33,426.31 ContiMortgage
9800001613 43,479.14 ContiMortgage
9800007372 26,707.53 ContiMortgage
▇▇▇▇▇▇▇▇▇▇ 34,450.15 ContiMortgage
9800007389 14,927.86 ContiMortgage
EXHIBIT E
FORM OF 10-K REPORT OF ISSUER
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
(▇▇▇▇ One)
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended DECEMBER 31, [ ]
__________________________ or
[ ] Transition Report Pursuant to Section 13 or 15d of the Securities
Exchange Act of 1934
For the transition period from ____________ to ____________
Commission file Number 333-61785
PaineWebber Mortgage Acceptance Corporation IV
(Exact name of registrant as specified in its charter)
Delaware ▇▇-▇▇▇▇▇▇▇
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (▇▇▇) ▇▇▇-▇▇▇▇
Securities registered pursuant to Section 12(b) of the Act
NONE
Securities registered pursuant to Section 12(g) of the Act
NONE
Indicate by check ▇▇▇▇ whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
[x] Yes [ ] No
PART I
Item 2. Properties
Not applicable on reliance of Relief Letters
Item 3. Legal Proceedings
There were no legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of the Security Holders.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder matters
There were [ ] participants in the DTC system holding positions in the
Cede certificates.
The following were Noteholders and Certificateholders of record as of
the end of the reporting year.
Empire Funding Home Loan Owner Trust 1999-1:
Class A-1 Cede & Co.
Class A-2 Cede & Co.
Class A-3 Cede & Co.
Class A-4 Cede & Co.
Class A-5 Cede & Co.
Class M-1 Cede & Co.
Class M-2 Cede & Co.
Class B-1 Cede & Co.
Class B-2 Cede & Co.
There is no established public trading market for the notes.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures: Information required by Item 304 of Reg. S-K.
There were no changes in and/or disagreements with Accountants on
Accounting and Financial Disclosures.
PART IV
Item 12. Security Ownership of Certain Beneficial Owners and Management
The Notes are represented by one or more notes registered in the name of
Cede & Co., the nominee of The Depository Trust Company. An investor
holding Notes is not entitled to receive a certificate representing such
Note, except in limited circumstances. Accordingly, Cede & Co. is the
sole holder of Notes, which it holds on behalf of brokers, dealers,
banks and other participants in the DTC system. Such participants may
hold Notes for their own accounts or for the accounts of their
customers.
The address of Cede & Co. is:
Cede & Co.
c/o The Depository Trust Company
Seven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Item 13. Certain Relationships and Related Transactions
There has not been, and there is not currently proposed, any
transactions or series of transactions, to which any of the Trust, the
Registrant, the Trustee or the Servicer is a party with any Noteholder
who, to the knowledge of the Registrant and Servicer, owns of record or
beneficially more than five percent of the Notes.
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
(a) 1. Not Applicable
2. Not Applicable
3. Exhibits
99.1 Annual Summary Statement
99.2 Annual Statement as to Compliance
99.3 Annual Independent Public Accountant's Servicing Report
(b ) Reports on Form 8-K
The Registrant has filed Current Reports on Form 8-K with the Securities
and Exchange Commission dated [ ].
(c) See (a) 3 above
(d) Not Applicable
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange A
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Empire Funding Home Loan Owner Trust 1999-1
/s/ _________________________
Vice President
U.S. Bank Trust National Association
Date [ ]
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
99.1 Annual Summary Statement
99.2 Annual Statement of Compliance
99.3 Report of Independent Accountants
EXHIBIT 99.1 - Summary of Aggregate Amounts or End of Year Amounts for
the period ending December 31, [ ]
Empire Funding Home Loan Owner Trust 1999-1
SUMMARY OF AGGREGATE AMOUNTS OR END OF YEAR AMOUNTS
Beginning Pool Balance
Ending Pool Balance
Principal Collections
Interest Collections
Defaulted Loans Balance
Servicer Fees
Owner Trustee Fees
Trustee Fees
60 Day Delinquent Amount
SIX MONTH ROLLING DELINQUENCY AVERAGE
CERTIFICATE BALANCE INTEREST PRINCIPAL
Class A-1
Class A-2
Class A-3
Class A-4
Class A-5
Class M-1
Class M-2
Class B-1
Class B-2
Exhibit 99.2 - Servicer's Annual Statement of Compliance To be
supplied upon receipt by the Trustee
Exhibit 99.3 - Report of Independent Auditors
To be supplied upon receipt by the Trustee