1
Exhibit 4.3
Subject to Completion
Xxxxxx Xxxxxxx ABS Capital I Inc.
Company
and
[---------------------------------]
Master Servicer
and
[---------------------------------]
Trustee
---------------------------
POOLING AND SERVICING AGREEMENT
Dated as of ______________________, 19____
---------------------------
Mortgage Loan Asset-Backed Pass-Through Certificates
Series 199__-__
2
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms................................................................ 3
Section 1.02. Provisions of General Application.................................................... 33
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance Of Mortgage Loans; Priority And Subordination Of
Ownership Interests.................................................................. 34
Section 2.02. Possession Of Mortgage Files; Access To Mortgage Files............................... 36
Section 2.03. Delivery Of Mortgage Loan Documents And Certificate Insurance
Policy............................................................................... 36
Section 2.04. Acceptance By Trustee Of The Trust Fund; Certain Substitutions;
Certification By Trustee............................................................. 37
Section 2.05. Execution Of Certificates............................................................ 39
Section 2.06. Further Action Evidencing Assignments................................................ 39
Section 2.07. Reserved............................................................................. 40
Section 2.08. Conveyance Of The Subsequent Mortgage Loans.......................................... 40
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations of the Master Servicer.................................................. 42
Section 3.02. Representations, Warranties And Covenants Of The Company................................ 43
Section 3.03. Purchase And Substitution............................................................... 44
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates..................................................................... 45
Section 4.02. Registration Of Transfer And Exchange Of Certificates................................ 45
Section 4.03. Mutilated, Destroyed, Lost Or Stolen Certificates.................................... 50
Section 4.04. Persons Deemed Owners................................................................ 51
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01. Appointment Of The Master Servicer................................................... 51
i
3
Page
Section 5.02. Subservicing Agreements Between The Master Servicer And
Subservicers......................................................................... 52
Section 5.03. Collection Of Certain Mortgage Loan Payments; Collection Account..................... 53
Section 5.04. Permitted Withdrawals From The Collection Account.................................... 55
Section 5.05. Payment Of Taxes, Insurance And Other Charges........................................ 56
Section 5.06. Maintenance Of Casualty Insurance.................................................... 56
Section 5.07. Maintenance Of Mortgage Impairment Insurance Policy.................................. 57
Section 5.08. Fidelity Bond; Errors And Omissions Policy........................................... 58
Section 5.09. Collection Of Taxes, Assessments And Other Items; Servicing
Account.............................................................................. 58
Section 5.10. Periodic Filings With The Securities And Exchange Commission;
Additional Information............................................................... 58
Section 5.11. Enforcement Of Due-On-Sale Clauses; Assumption Agreements............................ 59
Section 5.12. Realization Upon Defaulted Mortgage Loans............................................ 59
Section 5.13. Trustee To Cooperate; Release Of Mortgage Files...................................... 62
Section 5.14. Servicing Fee; Servicing Compensation................................................ 63
Section 5.15. Reports To The Trustee And The Company; Collection Account
Statements........................................................................... 63
Section 5.16. Annual Statement As To Compliance.................................................... 63
Section 5.17. Annual Independent Public Accountants' Servicing Report.............................. 64
Section 5.18. Optional Purchase Of Defaulted Mortgage Loans........................................ 64
Section 5.19. Reports To Be Provided By The Master Servicer........................................ 64
Section 5.20. Adjustment of Servicing Compensation in Respect of Prepaid Mortgage
Loans................................................................................ 65
Section 5.21. Periodic Advances.................................................................... 65
Section 5.22. Third Party Claims................................................................... 65
Section 5.23. Maintenance Of Corporate Existence And Licenses; Merger Or
Consolidation Of The Master Servicer................................................. 65
Section 5.24. Assignment Of Agreement By Master Servicer; Master Servicer Not To
Resign............................................................................... 66
Section 5.25. Information Reports To Be Filed By The Master Servicer............................... 66
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01. Establishment Of Certificate Accounts; Deposits To The Certificate
Accounts............................................................................. 66
Section 6.02. Permitted Withdrawals From The Certificate Accounts.................................. 67
Section 6.03. Collection Of Money.................................................................. 67
Section 6.04. The Certificate Insurance Policy..................................................... 68
Section 6.05. Distributions........................................................................ 69
Section 6.06. Investment Of Accounts............................................................... 72
Section 6.07. Reports By Trustee................................................................... 72
Section 6.08. Additional Reports By Trustee........................................................ 75
Section 6.09. Compensating Interest................................................................ 75
Section 6.10. Effect Of Payments By The Certificate Insurer; Subrogation........................... 75
ii
4
Page
Section 6.11. Allocation Of Liquidated Loan Losses................................................. 76
Section 6.12. Pre-Funding Accounts................................................................. 76
Section 6.13. Interest Coverage Accounts........................................................... 77
ARTICLE VII
DEFAULT
Section 7.01. Events Of Default.................................................................... 79
Section 7.02. Trustee To Act; Appointment Of Successor............................................. 80
Section 7.03. Waiver Of Defaults................................................................... 82
Section 7.04. Mortgage Loans, Trust Fund And Accounts Held For Benefit OF The
Certificate Insurer.................................................................. 82
ARTICLE VIII
TERMINATION
Section 8.01. Termination.......................................................................... 83
Section 8.02. Additional Termination Requirements.................................................. 84
Section 8.03. Accounting Upon Termination Of Master Servicer....................................... 85
ARTICLE IX
CONCERNING THE TRUSTEE
Section 9.01. Duties Of Trustee.................................................................... 85
Section 9.02. Certain Matters Affecting The Trustee................................................ 87
Section 9.03. Trustee Not Liable For Certificates or Mortgage Loans................................ 88
Section 9.04. Trustee May Own Certificates......................................................... 88
Section 9.05. Payment Of Trustee's Fees............................................................ 88
Section 9.06. Eligibility Requirements For Trustee................................................. 89
Section 9.07. Resignation and Removal of The Trustee............................................... 89
Section 9.08. Successor Trustee.................................................................... 90
Section 9.09. Merger or Consolidation of Trustee................................................... 90
Section 9.10. Appointment Of Co-Trustee Or Separate Trustee........................................ 91
Section 9.11. Limitation of Liability.............................................................. 92
Section 9.12. Trustee May Enforce Claims Without Possession of Certificates........................ 92
Section 9.13. Suits For Enforcements............................................................... 92
Section 9.14. Waiver Of Inventory, Accounting And Appraisal Requirements........................... 92
ARTICLE X
REMIC PROVISIONS
Section 10.01. Remic Administration................................................................. 92
Section 10.02 Prohibited Transactions and ACTIVITIES............................................... 95
iii
5
Page
Section 10.03. Master Servicer and Trustee Indemnification.......................................... 96
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Limitation on Liability of The Company and The Master Servicer....................... 96
Section 11.02. Acts of Certificateholders........................................................... 97
Section 11.03. Amendment............................................................................ 97
Section 11.04. Recordation of Agreement............................................................. 98
Section 11.05. Notices.............................................................................. 99
Section 11.06. Severability of Provisions........................................................... 99
Section 11.07. Counterparts......................................................................... 99
Section 11.08. Successors and Assigns............................................................... 99
Section 11.09. Headings............................................................................. 99
Section 11.10 Certificate Insurer Default.......................................................... 99
Section 11.11. Third Party Beneficiary.............................................................. 99
Section 11.12. Intent of the Parties................................................................100
Section 11.13. Notice to Rating Agencies and Certificateholder......................................100
Section 11.14. Governing Law........................................................................100
EXHIBITS
EXHIBIT A-1 Group I Certificate Insurance Policy
EXHIBIT A-2 Group II Certificate Insurance Policy
EXHIBIT B-1 Form of Class [A-1][A-2][A-3][A-4][I S][II S] Certificate
EXHIBIT B-2 Form of Class [R] Certificate
EXHIBIT C Mortgage File
EXHIBIT D-1 Mortgage Loan Schedule
EXHIBIT D-2 Mortgage Loan Schedule
EXHIBIT E Trustee's Acknowledgment of Receipt
EXHIBIT F Initial Certification of Trustee
EXHIBIT G Final Certification of the Trustee
EXHIBIT H Request for Release of Documents
EXHIBIT I Form of Transfer Affidavit and Agreement
EXHIBIT J Form of Transferor Certificate
EXHIBIT K
EXHIBIT L [RESERVED]
EXHIBIT M Certificate Re: Prepaid Loans
EXHIBIT N Subsequent Transfer Instrument
EXHIBIT O Form of Investor Representation Letter
EXHIBIT P Form of Transferor Representation Letter
EXHIBIT Q [Form of Rule 144A Investment Representation]
EXHIBIT R Premium Exhibit
EXHIBIT S Form of Erisa Representation Letter
iv
6
POOLING AND SERVICING AGREEMENT, dated as of
______________________, 19____ (the "Cut-off Date"), by and among Xxxxxx Xxxxxxx
ABS Capital I Inc., a Delaware corporation, in its capacity as company (the
"Company"), [_________________________________], a ______________ corporation,
in its capacity as master servicer (the "Master Servicer"), and
[_________________________________], a ___________________________, in its
capacity as trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Company intends to sell mortgage pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in five classes
(each, a "Class"), which in the aggregate will evidence the entire beneficial
ownership interest in the Trust Fund (as defined herein), consisting primarily
of the Mortgage Loans, the Pre-Funding Accounts and the Interest Coverage
Accounts (each, as defined herein). As provided herein, the Trustee will make an
election to treat the Trust Fund (other than the Pre-Funding Accounts and the
Interest Coverage Accounts) as a real estate mortgage investment conduit (a
"REMIC") for federal income tax purposes. The Class A Certificates (as defined
herein) and Class S Certificates (as defined herein) will represent ownership of
"regular interests" in the REMIC, and the Class R Certificates will constitute
the sole Class of "residual interest" in the REMIC for purposes of the REMIC
Provisions (as defined herein) under federal income tax law.
The following table sets forth the designation, type,
aggregate Original Certificate Principal Balance (as defined herein), maturity
date, initial ratings and certain features for each Class of Certificates
comprising the interests in the Trust Fund created hereunder.
AGGREGATE
DESIGNATION ORIGINAL
----------------------- CERTIFICATE
[DC]R [XXXXX'X] TYPE PRINCIPAL BALANCE FEATURES MATURITY DATE [S&P]
-------- ------------- --------------- ----------------------- --------------- --------------------- --------
The Group I Loans (as defined herein) have an aggregate
Principal Balance (as defined herein) as of the Cut-off Date equal to
$____________________. The Group II Loans (as defined herein) have an aggregate
Principal Balance as of the Cut-off Date equal to $_________________. The amount
deposited by the Company in the Pre-Funding Account on the Closing Date is
$__________________ for Loan Group I and $_________________________ for Loan
Group II.
In consideration of the mutual agreements herein contained,
the Company, the Master Servicer and the Trustee agree as follows:
1
7
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. Whenever used herein, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings.
"Accepted Servicing Practices": The Master Servicer's normal
servicing practices, which in general will conform to the mortgage servicing
practices of prudent mortgage lending institutions which service for their own
account mortgage loans of the same type as the Mortgage Loans in the
jurisdictions in which the related Mortgaged Properties are located.
"Account": Any Eligible Account established pursuant to
Sections 5.03, 5.09, 6.01, 6.04, 6.12 or 6.13 hereof.
"Accrual Period": With respect to (i) the Class A-1
Certificates, the "Accrual Period" is the period commencing on the Distribution
Date immediately preceding the month on which such Distribution Date occurs and
ending on the calendar day immediately preceding such Distribution Date, except
with respect to the first Distribution Date, which has an accrual period from
___________________, 199___ to _____________________, 199___ and (ii) with
respect to the Class A-2 Certificates, the "Accrual Period" is the previous
calendar month.
"Addition Notice": With respect to the transfer of Subsequent
Mortgage Loans to the Trust Fund pursuant to Section 2.08 of this Agreement, a
notice, substantially in the form of Exhibit N, which shall be given not later
than two Business Days prior to the related Subsequent Transfer Date, of the
Company's designation of Subsequent Mortgage Loans to be sold to the Trust Fund
and the aggregate principal balance as of the Subsequent Cut-off Date of such
Subsequent Mortgage Loans.
"Affiliate": With respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement": This Pooling and Servicing Agreement, including
the Exhibits, and all amendments and supplements.
"Amortized Group I Subordinated Amount Requirement": As of any
Distribution Date, the product of (i) ________% and (ii) the aggregate
outstanding Group I Certificate Principal Balance immediately preceding such
Distribution Date.
"Amortized Group II Subordinated Amount Requirement": As of
any Distribution Date, the product of (i) ________% and (ii) the aggregate
outstanding Group II Certificate Principal Balance immediately preceding such
Distribution Date.
"Appraised Value": As to any Mortgaged Property, the lesser of
(i) the appraised value of such Mortgaged Property based upon the appraisal made
at the time of the origination of the related Mortgage Loan, and (ii) the sales
price of the Mortgaged Property at such time of origination, except in the case
of a Mortgaged Property securing a refinanced or modified Mortgage Loan as to
which it is the
2
8
lesser of the appraised value determined above or the appraised value determined
in an appraisal at the time of refinancing or modification, as the case may be.
"Assignment Of Mortgage": With respect to each Mortgage Loan,
an assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect of record the sale of the
Mortgage to the Trustee for the benefit of the Certificateholders.
"Authorized Denominations": With respect to each class of
Class A Certificates, the minimum Percentage Interest corresponding to a minimum
denomination of [$25,000] and integral multiples of $[1] in excess thereof. With
respect to each class of Class S Certificates and Class R Certificates, a
minimum Percentage Interest of ________% and integral multiples of _______% in
excess thereof.
"Available Funds Shortfall": With respect to the Group I Loans
and any Distribution Date, an amount equal to the sum of (a) the Group I Class A
Interest Distribution Amount minus the Group I Available Funds for such
Distribution Date and (b) the Group I Subordination Deficit. With respect to the
Group II Loans and any Distribution Date, an amount equal to the sum of (a) the
Group II Class A Interest Distribution Amount minus the Group II Available Funds
for such Distribution Date and (b) the Group II Subordination Deficit.
"Balloon Mortgage Loan": Any Mortgage Loan that provided on
the date of origination for an amortization schedule extending beyond its stated
maturity date.
"Balloon Payment": With respect to any Balloon Mortgage Loan,
as of any date of determination, the Monthly Payment payable on the stated
maturity date of such Mortgage Loan.
"Business Day": Any day other than (a) a Saturday or Sunday,
or (b) a day on which banking institutions in the State of Delaware, the State
of New York or the state where the Trustee's corporate trust office is located
are authorized or obligated by law or executive order to be closed.
"Certificate": Any Class A Certificate, Class S Certificate or
Class R Certificate executed by the Trustee on behalf of the Trust Fund and
authenticated by the Trustee.
"Certificate Account": The Group I Certificate Account or the
Group II Certificate Account, as applicable.
"Certificateholder or Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that, neither a
Disqualified Organization nor a Non-United States Person shall be a Holder of a
Class R Certificate for any purposes hereof and, solely for the purposes of
giving any consent (except any consent required to be obtained pursuant to
Section 11.03), waiver, request or demand pursuant to this Agreement, any
Certificate registered in the name of the Company or the Master Servicer or any
Affiliate thereof shall be deemed not to be outstanding and the rights to which
it is entitled shall not be taken into account in determining whether the
requisite percentage of rights necessary to effect any such consent has been
obtained, except as otherwise provided in Section 11.03. The Trustee shall be
entitled to rely upon a certification of the Company or the Master Servicer in
determining if any Certificates are registered in the name of a respective
Affiliate. Any Certificates on which payments are made under the Certificate
Insurance Policy shall be deemed to be outstanding and held by the Certificate
Insurer to the extent of such payment.
3
9
"Certificate Insurance Payments Account": The Certificate
Insurance Payments Account established in accordance with Section 6.04(c) hereof
and maintained by the Trustee.
"Certificate Insurance Policy": As the context requires,
either (i) the Group I Certificate Insurance Policy and the Group II Certificate
Insurance Policy together or (ii) the Group I Certificate Insurance Policy or
the Group II Certificate Insurance Policy, as applicable.
"Certificate Insurer": __________________________, a stock
insurance company organized and created under the laws of the State of
_______________, and any successors thereto.
"Certificate Insurer Default": The failure by the Certificate
Insurer to make a payment required under any one of the Group I or Group II
Certificate Insurance Policies in accordance with its terms.
"Certificate Principal Balance": With respect to each class of
Class A Certificates, as determined separately, as of any time of determination,
the related Original Certificate Principal Balance less any amounts distributed
in reduction of the Certificate Principal Balance thereof pursuant to Section
6.05 on all prior Distribution Dates. With respect to each class of Class S
Certificates, as determined separately, as of any date of determination, the
related Original Certificate Principal Balance, plus the portion of the related
Class S Interest Distribution Amount added to the Certificate Principal Balance
thereof on each Distribution Date prior to such date pursuant to Section 6.05
less any amounts distributed in reduction of the Certificate Principal Balance
thereof pursuant to Section 6.05 on all prior Distribution Dates and less any
losses allocated thereto pursuant to Section 6.11. The Class R Certificates do
not have a "Certificate Principal Balance".
"Certificate Register": As described in Section 4.02(a).
"Civil Relief Act": The Soldiers' and Sailors' Civil Relief
Act of 1940, as amended.
"Civil Relief Act Interest Shortfall": With respect to any
Distribution Date, for any Mortgage Loan as to which there has been a reduction
in the amount of interest collectible thereon for the most recently ended Due
Period as a result of the application of the Civil Relief Act, the amount, if
any, by which (a) interest collectible on such Mortgage Loan during the most
recently ended calendar month is less than (b) interest accrued for the related
Accrual Period on the Principal Balance of such Mortgage Loan, calculated at a
rate equal to the sum of (A)(1) with respect to a Group I Loan, the Group I
Class A Pass-Through Rate on the Class A-1 Certificates or (2) with respect to a
Group II Loan, the weighted average of the Group II Class A Pass-Through Rates
on the Class A-2 Certificates, weighted on the basis of the Certificate
Principal Balances of such Certificates, in each case for such Distribution Date
and (B) the per annum rates at which the related Servicing Fee and Trustee Fee
accrue and the related Premium Percentage.
"Class A Certificate": Any of the Class A-1 Certificates or
Class A-2 Certificates.
"Class A Certificateholder": A Holder of a Class A
Certificate.
"Class A-1 Certificate": Any Certificate designated as a
"Class A-1 Certificate" on the face thereof, in the form of Exhibit B-1 hereto,
and authenticated by the Trustee in accordance with the procedures set forth
herein and evidencing an interest designated as a "regular interest" in the
REMIC for the purposes of the REMIC Provisions and primarily evidencing an
interest in Loan Group I.
4
10
"Class A-2 Certificate": Any Certificate designated as a
"Class A-2 Certificate" on the face thereof, in the form of Exhibit B-1 hereto,
and authenticated by the Trustee in accordance with the procedures set forth
herein and evidencing an interest designated as a "regular interest" in the
REMIC for the purposes of the REMIC Provisions and primarily evidencing an
interest in Loan Group II.
"Class I S Certificate": Any Certificate designated as a
"Class I S Certificate" on the face thereof, in the form of Exhibit B-1 hereto,
and authenticated by the Trustee in accordance with the procedures set forth
herein and evidencing an interest designated as a "regular interest" in the
REMIC for the purposes of the REMIC Provisions and primarily evidencing an
interest in Loan Group I.
"Class II S Certificate": Any Certificate designated as a
"Class II S Certificate" on the face thereof, in the form of Exhibit B-1 hereto,
and authenticated by the Trustee in accordance with the procedures set forth
herein and evidencing an interest designated as a "regular interest" in the
REMIC for the purposes of the REMIC Provisions and primarily evidencing an
interest in Loan Group II.
"Class R Certificate": Any one of the Class R Certificates
executed by the Trustee and authenticated by the Trustee substantially in the
form annexed hereto as Exhibit B-2, subordinate to the Class A Certificates in
right of payment to the extent set forth herein and evidencing an interest
designated as a "residual interest" in the REMIC for purposes of the REMIC
Provisions.
"Class R Certificateholder": A Holder of a Class R
Certificate.
"Class S Certificate": Any of the Class I S or Class II S
Certificates.
"Class S Certificateholder": A Holder of a Class S
Certificate.
"Class S Interest Distribution Amount": With respect to each
class of Class S Certificates for any Distribution Date, the aggregate amount of
interest accrued for the related Accrual Period on the related Notional Amount
immediately prior to such Distribution Date at the related Class S Pass-Through
Rate (based on a 360-day year and the actual number of days in the prior
calendar month in the case of the Class I S Certificates and a 360-day year and
a 30-day month in the case of the Class II S Certificates).
"Class S Pass-Through Rate": With respect to the Class I S
Certificates and any Distribution Date, a rate equal to the weighted average,
expressed as a percentage, of the related Pool Strip Rates of all of the Group I
Loans in the Trust Fund as of the Due Date in the month immediately preceding
the month in which such Distribution Date occurs, weighted on the basis of the
respective Principal Balances of such Mortgage Loans at the beginning of the
related Due Period. With respect to the Class II S Certificates and any
Distribution Date, a rate equal to the weighted average, expressed as a
percentage, of the related Pool Strip Rates of all of the Group II Loans in the
Trust Fund as of the Due Date in the month immediately preceding the month in
which such Distribution Date occurs, weighted on the basis of the respective
Principal Balances of such Mortgage Loans at the beginning of the related Due
Period.
"Closing Date": _________________, 199___.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The Eligible Account established and
maintained by the Master Servicer pursuant to Section 5.03.
5
11
"Combined Loan-to-Value Ratio": With respect to any Mortgage
Loan secured by a second lien on the related Mortgaged Property, as of any date,
the fraction, expressed as a percentage, the numerator of which is the sum of
(i) the original principal balance of such Mortgage Loan and (ii) the original
aggregate principal balance of the related Senior Mortgage Loans (if any) at the
date of determination, and the denominator of which is the Appraised Value of
the related Mortgaged Property.
"Commission": The Securities and Exchange Commission.
"Company": [Xxxxxx Xxxxxxx ABS Capital I Inc.], a Delaware
corporation, and any successor thereto.
"Compensating Interest": As defined in Section 6.09 hereof.
"Curtailment": With respect to a Mortgage Loan, any payment of
principal received during a Due Period as part of a payment that is in excess of
the amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the Mortgage Loan in full, nor is intended to cure a
delinquency.
"Custodian": As defined in Section 2.02(c).
"Cut-off Date": ______________________, 19____.
["DCR": Duff & Xxxxxx Credit Rating Co., or its successor in
interest.]
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Mortgage Loan in a proceeding under the United States Bankruptcy Code,
except such a reduction that constitutes a Deficient Valuation or a permanent
forgiveness of principal.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the United
States Bankruptcy Code.
"Deleted Mortgage Loan": A Mortgage Loan replaced by or to be
replaced by a Qualified Substitute Mortgage Loan.
"Delinquent": A Mortgage Loan is "delinquent" if any payment
due thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Depository": The Depository Trust Company, 00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 and any successor Depository hereafter named. The
nominee of the initial Depository for purposes of registering those Certificates
that are to be book-entry Certificates is Cede & Co. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code
6
12
of the State of New York and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
"Direct Participant": Any broker-dealer, bank or other
financial institution for which the Depository holds Class A Certificates from
time to time as a securities depositary.
"Disqualified Organization": Any of (i) the United States, any
State or political subdivision thereof, any possession of the United States, or
any agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for the FHLMC, a majority of its board of directors is not
selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (unless such organization is subject to the tax imposed by
Section 511 of the Code on unrelated business taxable income), or rural electric
and telephone cooperatives described in Section 1381(a)(2)(C) of the Code and
(iv) any other Person so designated by the Trustee based upon an Opinion of
Counsel provided to the Trustee that the holding of an ownership interest in a
Class R Certificate by such Person may cause the REMIC or any Person having an
ownership interest in any Class of Certificates (other than such Person) to
incur liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the transfer of an ownership interest in the Class
R Certificate to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code.
"Distribution Date": The 25th day of any month or if such 25th
day is not a Business Day, the first Business Day immediately following,
commencing on ______________, 199___.
"Due Date": The first day of each calendar month.
"Due Period": With respect to each Distribution Date, the
period beginning on the opening of business on the second day of the calendar
month preceding the calendar month in which such Distribution Date occurs, and
ending at the close of business on the first day of the calendar month in which
such Distribution Date occurs.
"Eligible Account": Either (a) an account or accounts
maintained with an institution (which may include the Trustee, provided such
institution otherwise meets these requirements) whose deposits are insured by
the FDIC, the unsecured and uncollateralized debt obligations of which
institution shall be rated [AA] or better by [S&P] and [DCR] and [Aa2] or better
by [Xxxxx'x] and in the highest short term rating by the Rating Agencies, and
which is (i) a federal savings and loan association duly organized, validly
existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association
(including the Trustee) duly organized, validly existing and in good standing
under the federal banking laws, (iv) a principal subsidiary of a bank holding
company, or (v) approved in writing by the Certificate Insurer and the Rating
Agencies or (B) a trust account or accounts maintained with the corporate trust
department of a federal or state chartered depository institution acceptable to
each Rating Agency and the Certificate Insurer (the Trustee shall be deemed
acceptable, provided that the Trustee otherwise meets these requirements),
having capital and surplus of not less than $50,000,000, acting in its fiduciary
capacity.
"ERISA": As defined in Section 4.02(m) hereof.
"Event of Default": One or more of the events described in
Section 7.01 hereof.
7
13
"FDIC": The Federal Deposit Insurance Corporation and any
successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation and any
successor thereto.
"FNMA": Federal National Mortgage Association and any
successor thereto.
"Foreclosure Profits": As to any Distribution Date, (i) Net
Liquidation Proceeds in respect of each Mortgage Loan that became a Liquidated
Mortgage Loan during the month immediately preceding the month of such
Distribution Date minus (ii) the sum of the unpaid principal balance of each
such Liquidated Mortgage Loan plus accrued and unpaid interest at the applicable
Mortgage Interest Rate on the unpaid principal balance thereof from the Due Date
to which interest was last paid by the Mortgagor (or, in the case of a
Liquidated Mortgage Loan that had been an REO Mortgage Loan, from the Due Date
to which interest was last deemed to have been paid pursuant to Section 5.12) to
the first day of the month following the month in which such Mortgage Loan
became a Liquidated Mortgage Loan.
"Funding Period": As determined separately for Loan Group I
and Loan Group II, the period beginning on the Closing Date and ending on the
earlier of the date on which (a) the amount on deposit in the related
Pre-Funding Account is less than $________________ or (b) the close of business
on ___________________, 199___.
"GAAP": Generally accepted accounting principles.
"Gross Margin": As to each Group I Loan, the fixed percentage
set forth in the related Mortgage Note and indicated in the related Mortgage
Loan Schedules as the "Gross Margin," which percentage is added to the related
Index on each Rate Adjustment Date to determine (subject to rounding, the
Periodic Cap, Lifetime Floor and the Lifetime Cap) the Mortgage Interest Rate on
such Mortgage Loan until the next Rate Adjustment Date.
"Group I Available Funds": As defined in Section 6.04(a).
"Group II Available Funds": As defined in Section 6.04(a).
"Group I Certificate Account": The Certificate Account
established with respect to the Group I Certificates in accordance with Section
6.01(a) hereof and maintained by the Trustee.
"Group II Certificate Account": The Certificate Account
established with respect to the Group II Certificates in accordance with Section
6.01(a) hereof and maintained by the Trustee.
"Group I Certificate Insurance Policy": The certificate
guaranty insurance policy No. _____, and all endorsements thereto dated the
Closing Date, issued by the Certificate Insurer for the benefit of the Group I
Certificateholders, a copy of which is attached hereto as Exhibit A-1.
"Group II Certificate Insurance Policy": The certificate
guaranty insurance policy No. _____, and all endorsements thereto dated the
Closing Date, issued by the Certificate Insurer for the benefit of the Group II
Certificateholders, a copy of which is attached hereto as Exhibit A-2.
"Group I Certificates": Collectively, the Class A-1
Certificates, the Class I S Certificates and the Class R Certificates.
8
14
"Group II Certificates": Collectively, the Class A-2
Certificates, the Class II S Certificates and the Class R Certificates.
"Group I Class A Available Funds Cap Carry-Forward Amount": As
of any Distribution Date, an amount equal to (x) the sum of (i) the excess, if
any, of (a) the aggregate amount of interest due on the Class A Certificates on
each Distribution Date, calculated at the Group I Class A Formula Pass-Through
Rate applicable to each such Distribution Date over (b) the aggregate amount of
interest due on the Class A-1 Certificates on such Distribution Dates,
calculated at the Group I Class A Pass-Through Rate applicable to each such
Distribution Date, and (ii) the interest accrued during the prior Accrual Period
on the amount of any Group I Class A Available Funds Cap Carry-Forward Amount
immediately prior to such Distribution Date, calculated on the basis of a
360-day year and the actual number of days elapsed and using the Group I Class A
Formula Pass-Through Rate applicable to such Distribution Date minus (y) the
aggregate of all amounts distributed to the Class A-1 Certificateholders on all
prior Distribution Dates pursuant to Section 6.05(b)(ix) hereof.
"Group I Class A Available Funds Pass-Through Rate": As of any
Distribution Date, the per annum rate equal to (i) the weighted average of the
Mortgage Interest Rates of the Group I Loans, minus (ii) the sum of the rates
per annum used to determine the Servicing Fee, the Trustee Fee and the Premium
Percentage and minus (iii) commencing on the seventh Distribution Date, ____%
per annum.
"Group II Class A Available Funds Pass-Through Rate": As of
any Distribution Date, the per annum rate equal to (i) the weighted average of
the Mortgage Interest Rates of the Group II Loans, minus (ii) the sum of the
rates per annum used to determine the Servicing Fee, the Trustee Fee and the
Premium Percentage.
"Group I Class A Carry-Forward Amount": As of any Distribution
Date, the sum of (a) the amount, if any, by which (i) the Group I Insured
Distribution Amount as of the immediately preceding Distribution Date exceeded
(ii) the amount actually distributed to the Holders of the Class A-1
Certificates on such Distribution Date in respect thereof (including, without
limitation, any Insured Payments paid to the Holders of the Class A-1
Certificates by the Certificate Insurer as described in Sections 6.04 and 6.05
hereof) and (b) interest accrued for the related Accrual Period on the amount
described in clause (a), calculated at an interest rate equal to the Group I
Class A Pass-Through Rate on the Class A-1 Certificates applicable to such
Distribution Date. Any Group I Class A Carry-Forward Amount shall be deemed to
be allocated first to any related Group I Subordination Deficit and second to
any related Group I Class A Interest Distribution Amount.
"Group II Class A Carry-Forward Amount": As of any
Distribution Date, the sum of (a) the amount, if any, by which (i) the Group II
Insured Distribution Amount as of the immediately preceding Distribution Date
exceeded (ii) the amount actually distributed to the Holders of the Class A-2
Certificates on such Distribution Date in respect thereof (including, without
limitation, any Insured Payments paid to the Holders of the Class A-2
Certificates by the Certificate Insurer as described in Sections 6.04 and 6.05
hereof) and (b) interest accrued for the related Accrual Period on the amount
described in clause (a), calculated at an interest rate equal to the weighted
average of the Group II Class A Pass-Through Rate applicable to such
Distribution Date, weighted on the basis of the Certificate Principal Balances
of such Certificates. Any Group II Class A Carry-Forward Amount shall be deemed
to be allocated first to any related Group II Subordination Deficit and second
to any related Group II Class A Interest Distribution Amount.
9
15
"Group I Class A Formula Pass-Through Rate": As of any
Distribution Date, is the lesser of (x) the rate described in clause (i) of the
definition of "Group I Class A Pass-Through Rate" for such Distribution Date and
(y) the weighted average of the Net Lifetime Caps of the Group I Loans.
"Group I Class A Interest Distribution Amount": With respect
to the Class A-1 Certificates for any Distribution Date the sum of (i) (a) the
aggregate amount of interest accrued for the related Accrual Period on the
related Certificate Principal Balance immediately prior to such Distribution
Date at the related Group I Class A Pass-Through Rate (based on a 360-day year
and the actual number of days in the prior calendar month if clause (i) of the
definition of Group I Class A Pass-Through Rate is used with respect to such
Distribution Date, or a 360-day year and a 30-day month if clause (ii) of the
definition of Group I Class A Pass-Through Rate is used with respect to such
Distribution Date) minus (b) the aggregate related Mortgage Loan Interest
Shortfall for such Distribution Date and (ii) the portion of any related Group I
Class A Carry-Forward Amount which relates to a shortfall (other than a related
Mortgage Loan Interest Shortfall) in a distribution of a Group I Class A
Interest Distribution Amount in respect of such Class A-1 Certificates, in each
case as of such Distribution Date.
"Group II Class A Interest Distribution Amount": With respect
to the Class A-2 Certificates for any Distribution Date, the sum of (i) (a) the
aggregate amount of interest accrued for the related Accrual Period on the
related Certificate Principal Balance immediately prior to such Distribution
Date at the related Class A Pass-Through Rate, based on 360-day year and a
30-day month minus (b) the aggregate related Mortgage Loan Interest Shortfall
for such Distribution Date and (ii) the portion of any related Group II Class A
Carry-Forward Amount which relates to a shortfall (other than a related Mortgage
Loan Interest Shortfall) in a distribution of a Group II Class A Interest
Distribution Amount in respect of such Class A-2 Certificates, as of such
Distribution Date.
"Group I Class A Pass-Through Rate": With respect to the Class
A-1 Certificates, for each Distribution Date, the per annum rate equal to the
lesser of:
(i) with respect to (a) any Distribution Date which
occurs on or prior to the date on which the Pool
Principal Balance is less than ___% of the Original
Pool Principal Balance, One-Month LIBOR plus
_________% or (b) any Distribution Date thereafter
One-Month LIBOR plus ______%; and
(ii) the Group I Class A Available Funds Pass-Through Rate
for such Distribution Date.
"Group II Class A Pass-Through Rate": With respect to the
Class A-2 Certificates, for each Distribution Date, the per annum rate equal
with respect to (a) any Distribution Date which occurs on or prior to the date
on which the Pool Principal Balance is less than ______% of the Original Pool
Principal Balance, ________%, or (b) any Distribution Date thereafter, _______%.
"Group I Class A Principal Distribution Amount": With respect
to the Group I Certificates for any Distribution Date, the lesser of:
(a) the excess of (i) the sum, as of such Distribution Date, of
(A) the Group I Available Funds and (B) any related Insured
Payment over (ii) the Group I Class A Interest Distribution
Amount; and
(b) the sum, without duplication, of:
10
16
(i) the portion of any Group I Class A Carry-Forward
Amount which relates to a shortfall in a distribution
of a Group I Subordination Deficit,
(ii) all scheduled installments of principal in respect of
the Group I Loans received or advanced during the
related Due Period, together with all unscheduled
recoveries of principal in respect of the Group I
Loans received by the Master Servicer during the
prior calendar month,
(iii) the Principal Balance of each Group I Loan that was
repurchased by the Seller, by an Affiliate of the
Seller or by the Company,
(iv) any Substitution Adjustments delivered by the Company
on the related Master Servicer Remittance Date in
connection with a substitution of a Group I Loan,
(v) the Net Liquidation Proceeds collected by the Master
Servicer of all Group I Loans during the related Due
Period (to the extent such Net Liquidation Proceeds
related to principal),
(vi) the amount of any Group I Subordination Deficit for
such Distribution Date,
(vii) the proceeds received by the Trustee with respect to
the Group I Loans from any termination of the Trust
Fund (to the extent such proceeds are related to
principal),
(viii) the amount of any Group I Subordination Increase
Amount for such Distribution Date, and
(ix) with respect to the Distribution Date occurring in
________________, 199___, any amounts in the Group I
Pre-Funding Account after giving effect to any
purchase of related Subsequent Mortgage Loans;
MINUS
(x) the amount of any Group I Subordination Reduction
Amount for such Distribution Date.
"Group II Class A Principal Distribution Amount": With respect
to the Class A-2 Certificates for any Distribution Date, the lesser of:
(a) the excess of (i) the sum, as of such Distribution Date, of
(a) the Group II Available Funds and (B) any related Insured
Payment over (ii) the Group II Class A Interest Distribution
Amount; and
(b) the sum, without duplication, of:
(i) the portion of any Group II Class A Carry-Forward
Amount which relates to a shortfall in a distribution
of a Group II Subordination Deficit,
(ii) all scheduled installments of principal in respect of
the Group II Loans received or advanced during the
related Due Period, together with all unscheduled
11
17
recoveries of principal in respect of the Group II
Loans received by the Master Servicer during the
prior calendar month,
(iii) the Principal Balance of each Group II Loan that
either was repurchased by the Seller, by an Affiliate
of the Seller or by the Company,
(iv) any Substitution Adjustments delivered by the Company
on the related Master Servicer Remittance Date in
connection with a substitution of a Group II Loan,
(v) the Net Liquidation Proceeds collected by the Master
Servicer of all Group II Loans during the related Due
Period (to the extent such Net Liquidation Proceeds
related to principal),
(vi) the amount of any Group II Subordination Deficit for
such Distribution Date,
(vii) the proceeds received by the Trustee with respect to
the Group II Loans of any termination of the Trust
Fund (to the extent such proceeds are related to
principal),
(viii) the amount of any Group II Subordination Increase
Amount for such Distribution Date, and
(ix) with respect to the Distribution Date occurring in
_________________, 199___, any amounts in the Group
II Pre-Funding Account after giving effect to any
purchase of related Subsequent Mortgage Loans;
MINUS
(x) the amount of any Group II Subordination Reduction
Amount for such Distribution Date.
"Group I Excess Subordinated Amount": With respect to any
Distribution Date, the difference, if any, between (a) the Group I Subordinated
Amount that would exist on such Distribution Date after taking into account all
distributions to be made on such Distribution Date (exclusive of any reductions
thereto attributable to Group I Subordination Reduction Amounts on such
Distribution Date) and (b) the Group I Required Subordinated Amount for such
Distribution Date.
"Group II Excess Subordinated Amount": With respect to any
Distribution Date, the difference, if any, between (a) the Group II Subordinated
Amount that would exist on such Distribution Date after taking into account all
distributions to be made on such Distribution Date (exclusive of any reductions
thereto attributable to Group II Subordination Reduction Amounts on such
Distribution Date) and (b) the Group II Required Subordinated Amount for such
Distribution Date.
"Group I Insured Distribution Amount": With respect to any
Distribution Date, the sum of (a) the Group I Class A Interest Distribution
Amount with respect to such Distribution Date and (b) the Group I Subordination
Deficit, if any, as of such Distribution Date.
"Group II Insured Distribution Amount": With respect to any
Distribution Date, the sum of (a) the Group II Class A Interest Distribution
Amount with respect to such Distribution Date and (b) the Group II Subordination
Deficit, if any, as of such Distribution Date.
12
18
"Group I Interest Coverage Account": With respect to Loan
Group I, the Account established and maintained pursuant to Section 6.13, which
must be an Eligible Account.
"Group II Interest Coverage Account": With respect to Loan
Group II, the Account established and maintained pursuant to Section 6.13, which
must be an Eligible Account.
"Group I Loans" or "Loan Group I": The group of Mortgage Loans
identified on Exhibit D-1 from time to time.
"Group II Loans" or "Loan Group II": The group of Mortgage
Loans identified on Exhibit D-2 from time to time.
"Group I Net Monthly Excess Cashflow": As of any Distribution
Date, an amount equal to (x) the Group I Available Funds minus (y) the sum of
(i) sum of the Group I Class A Interest Distribution Amount and the amount
described in clause (b) of the definition of Group I Class A Principal
Distribution Amount (calculated for this purpose without regard to any Group I
Subordination Increase Amount, Group I Subordination Reduction Amount or portion
thereof included therein) and (ii) the Group I Reimbursement Amount, if any, for
such Distribution Date.
"Group II Net Monthly Excess Cashflow": As of any Distribution
Date, an amount equal to (x) the Group II Available Funds minus (y) the sum of
(i) the sum of the Group II Class A Interest Distribution Amount and the amount
described in clause (b) of the definition of Group II Class A Principal
Distribution Amount (calculated for this purpose without regard to any Group II
Subordination Increase Amount, Group II Subordination Increase Amount or portion
thereof included therein) and (ii) the Group II Reimbursement Amount, if any,
for such Distribution Date.
"Group I Pool Principal Balance": The sum of the aggregate
Principal Balances of the Group I Loans in the Trust Fund and the Group I
Pre-Funded Amount as of any date of determination.
"Group II Pool Principal Balance": The sum of the aggregate
Principal Balances of the Group II Loans in the Trust Fund and the Group II
Pre-Funded Amount as of any date of determination.
"Group I Pre-Funded Amount": With respect to any date of
determination, the amount on deposit in the Group I Pre-Funding Account.
"Group II Pre-Funded Amount": With respect to any date of
determination, the amount on deposit in the Group II Pre-Funding Account.
"Group I Pre-Funding Account": The account established and
maintained pursuant to Section 6.12 as defined therein.
"Group II Pre-Funding Account": The account established and
maintained pursuant to Section 6.12 as defined therein.
"Group I Principal Remittance Amount": As of any Distribution
Date, the sum, without duplication of the amounts specified in clauses (b)(ii)
through (v), (vii) and (viii) of the definition of Group I Class A Principal
Distribution Amount.
13
19
"Group II Principal Remittance Amount": As of any Distribution
Date, the sum, without duplication of the amounts specified in clauses (b)(ii)
through (v), (vii) and (viii) of the definition of Group II Class A Principal
Distribution Amount.
["Group I Reimbursement Amount": As of any Distribution Date,
the sum of (a)(i) all Group I Insured Payments (as defined in the Group I
Certificate Insurance Policy) previously paid by the Certificate Insurer and in
each case not previously repaid to the Certificate Insurer pursuant to Sections
6.05(b) or 6.05(c) hereof plus (ii) interest accrued on each such Group I
Insured Payment and Group I Preference Payments not previously repaid calculated
at the Group I Class A Pass-Through Rate from the date such Group I Insured
Payment or Group I Preference Amount was made and (b)(i) any amounts then due
and owing to the Certificate Insurer under the Insurance Agreement, as certified
to the Trustee by the Certificate Insurer plus (ii) interest on such amounts at
the Late Payment Rate (as defined in the Insurance Agreement). The Certificate
Insurer shall notify the Trustee and the Company of the amount of any Group I
Reimbursement Amount.
"Group II Reimbursement Amount": As of any Distribution Date,
the sum of (a)(i) all Group II Insured Payments (as defined in the Group II
Certificate Insurance Policy) previously paid by the Certificate Insurer and in
each case not previously repaid to the Certificate Insurer pursuant to Sections
6.05(b) or 6.05(c) hereof plus (ii) interest accrued on each such Group II
Insured Payment and Group II Preference Payments not previously repaid
calculated at the Group II Class A Pass-Through Rate from the date such Group II
Insured Payment or Group II Preference Amount was made and (b)(i) any amounts
then due and owing to the Certificate Insurer under the Insurance Agreement, as
certified to the Trustee by the Certificate Insurer plus (ii) interest on such
amounts at the Late Payment Rate (as defined in the Insurance Agreement). The
Certificate Insurer shall notify the Trustee and the Company of the amount of
any Group II Reimbursement Amount.]
"Group I Required Subordinated Amount": For each Distribution
Date, the amount determined as follows:
(a) for any Distribution Date occurring during the period
commencing on the Closing Date and ending on the later of (x)
the date upon which principal payments on the Group I Loans
equal to one-half of the Original Group I Pool Principal
Balance have been received and (y) the thirtieth Distribution
Date following the Closing Date, the greater of the following:
(i) the Initial Group I Specified Subordinated Amount;
and
(ii) two times an amount equal to (x) one-half of the
aggregate Principal Balances of all Group I Loans
which are 91 or more days Delinquent (including REO
Properties) minus (y) three times the Group I Net
Monthly Excess Cashflow for such Distribution Date;
and
(b) for any Distribution Date occurring after the end of the
period in clause (a) above, the greatest of the following:
(i) the lesser of (a) the Initial Group I Specified
Subordinated Amount and (B) two times the Amortized
Group I Subordinated Amount Requirement,
(ii) two times the difference of (a) one-half of the
aggregate Principal Balances of all Group I Loans
which are 91 or more days Delinquent (including REO
Properties)
14
20
and (B) three times the Group I Net Monthly Excess
Cashflow for such Distribution Date
(iii) an amount equal to ________% of the Original Group I
Pool Principal Balance and
(iv) the sum of the then outstanding Principal Balances of
the Group I Loans with the four largest outstanding
Principal Balances.
Notwithstanding anything to the contrary set forth in clauses
(a) or (b) above, on or after any Distribution Date on which a Group I Insured
Payment is made, or any Distribution Date on which an Event of Default has
occurred and is continuing, the Group I Required Subordinated Amount shall be
equal to the Group I Required Subordinated Amount as of the Distribution Date
immediately prior to the Distribution Date on which either such event occurred.
"Group II Required Subordinated Amount": For each Distribution
Date, the amount determined as follows:
(a) for any Distribution Date occurring during the period
commencing on the Closing Date and ending on the later of (x)
the date upon which principal payments on the Group II Loans
equal to one-half of the Original Group II Pool Principal
Balance have been received and (y) the thirtieth Distribution
Date following the Closing Date, the greater of the following:
(i) the Initial Group II Specified Subordinated Amount;
and (ii) two times an amount equal to (x) one-half of
the aggregate Principal Balances of all Group II
Loans which are 91 or more days Delinquent (including
REO Properties) minus (y) three times the Group II
Net Monthly Excess Cashflow for such Distribution
Date; and
(b) for any Distribution Date occurring after the end of the
period in clause (a) above, the greatest of the following:
(i) the lesser of (a) the Initial Group II Specified
Subordinated Amount and (B) two times the Amortized
Group II Subordinated Amount Requirement,
(ii) two times the difference of (a) one-half of the
aggregate Principal Balances of all Group II Loans
which are 91 or more days Delinquent (including REO
Properties) and (B) three times the Group II Net
Monthly Excess Cashflow for such Distribution Date,
(iii) an amount equal to ______% of the Original Group II
Pool Principal Balance and
(iv) the sum of the then outstanding Principal Balances of
the Group II Loans with the four largest outstanding
Principal Balances.
Notwithstanding anything to the contrary set forth in clauses
(a) or (b) above, on or after any Distribution Date on which a Group II Insured
Payment is made, or any Distribution Date on which an Event of Default has
occurred and is continuing, the Group II Required Subordinated Amount shall
15
21
be equal to the Group II Required Subordinated Amount as of the Distribution
Date immediately prior to the Distribution Date on which either such event
occurred.
"Group I Subordinated Amount": As of any Distribution Date,
the difference, if any, between (a) the Group I Pool Principal Balance as of the
close of business on the last day of the related Due Period and (b) the
aggregate Certificate Principal Balance of the Class A-1 Certificates as of such
Distribution Date (after taking into account the payment of the Group I
Principal Remittance Amount related to such Distribution Date); PROVIDED,
HOWEVER, that such amount shall not be less than zero.
"Group II Subordinated Amount": As of any Distribution Date,
the difference, if any, between (a) the Group II Pool Principal Balance as of
the close of business on the last day of the related Due Period and (b) the
aggregate Certificate Principal Balance of the Class A-2 Certificates as of such
Distribution Date (after taking into account the payment of the Group II
Principal Remittance Amount related to such Distribution Date); PROVIDED,
HOWEVER, that such amount shall not be less than zero.
"Group I Subordination Deficiency Amount": With respect to any
Distribution Date, the amount, if any, by which (a) the Group I Required
Subordinated Amount applicable to such Distribution Date exceeds (b) the Group I
Subordinated Amount applicable to such Distribution Date prior to taking into
account the payment of any related Group I Subordination Increase Amounts on
such Distribution Date.
"Group II Subordination Deficiency Amount": With respect to
any Distribution Date, the amount, if any, by which (a) the Group II Required
Subordinated Amount applicable to such Distribution Date exceeds (b) the Group
II Subordinated Amount applicable to such Distribution Date prior to taking into
account the payment of any related Group II Subordination Increase Amounts on
such Distribution Date.
"Group I Subordination Deficit": As of any Distribution Date,
the amount, if any, by which (a) the aggregate Certificate Principal Balance of
the Class A-1 Certificates (after taking into account the payment of the Group I
Class A Principal Distribution Amount (other than payments made with respect
thereto pursuant to clause (vi) of the definition of Group I Class A Principal
Distribution Amount from amounts drawn under the Group I Certificate Insurance
Policy)) on such date exceeds (b) the Group I Pool Principal Balance determined
as of the end of the immediately preceding Due Period.
"Group II Subordination Deficit": As of any Distribution Date,
the amount, if any, by which (a) the aggregate Certificate Principal Balance of
the Class A-2 Certificates (after taking into account the payment of the Group
II Class A Principal Distribution Amount (other than payments made with respect
thereto pursuant to clause (vi) of the definition of Group II Class A Principal
Distribution Amount from amounts drawn under the Group II Certificate Insurance
Policy)) on such date exceeds (b) the Group II Pool Principal Balance determined
as of the end of the immediately preceding Due Period.
"Group I Subordination Increase Amount": With respect to any
Distribution Date, the lesser of (a) the Group I Subordination Deficiency Amount
as of such Distribution Date (after taking into account the payment of the Group
I Class A Principal Distribution Amount on such Distribution Date (other than
clause (viii) thereof)) and (b) the amount of Group I Net Monthly Excess
Cashflow on such Distribution Date.
16
22
"Group II Subordination Increase Amount": With respect to any
Distribution Date, the lesser of (a) the Group II Subordination Deficiency
Amount as of such Distribution Date (after taking into account the payment of
the Group II Class A Principal Distribution Amount on such Distribution Date
(other than clause (viii) thereof)) and (b) the amount of Group II Net Monthly
Excess Cashflow on such Distribution Date.
"Group I Subordination Reduction Amount": With respect to any
Distribution Date, an amount equal to the lesser of (a) the Group I Excess
Subordinated Amount for such Distribution Date and (b) the Group I Principal
Remittance Amount for the prior Due Period.
"Group II Subordination Reduction Amount": With respect to any
Distribution Date, an amount equal to the lesser of (a) the Group II Excess
Subordinated Amount for such Distribution Date and (b) the Group II Principal
Remittance Amount for the prior Due Period.
"Index": As to any Group I Loan, a rate per annum equal to the
average of the interbank offered rates for six month United States dollar
deposits in the London market as published in the Western Edition of THE WALL
STREET JOURNAL, as most recently available as of the first business day
forty-five, thirty or five days prior to any Rate Adjustment Date, as specified
in the related Mortgage Note.
"Indirect Participant": Any financial institution for whom any
Direct Participant holds an interest in a Class A Certificate.
"Initial Group I Loan": A Group I Loan assigned and
transferred to the Trustee on the Closing Date, as listed on the Mortgage Loan
Schedule attached hereto as Exhibit D-1.
"Initial Group II Loan": A Group II Loan assigned and
transferred to the Trustee on the Closing Date, as listed on the Mortgage Loan
Schedule attached hereto as Exhibit D-2.
"Initial Group I Specified Subordinated Amount": An amount
equal to ______% of the Original Group I Pool Principal Balance.
"Initial Group II Specified Subordinated Amount": An amount
equal to _______% of the Original Group II Pool Principal Balance.
"Initial Mortgage Loan": Any Initial Group I Loan or Initial
Group II Loan.
"Insurance Agreement": The Insurance Agreement dated as of
______________________, 19____ among the Certificate Insurer, the Company, the
Master Servicer, the Trustee and ___________________________________, as such
agreement may be amended or supplemented in accordance with the provisions
thereof.
"Insurance Proceeds: Proceeds paid by any insurer pursuant to
any insurance policy covering a Mortgage Loan to the extent such proceeds are
not applied to the restoration of the related Mortgaged Property or released to
the related Mortgagor in accordance with Accepted Servicing Practices.
"Insurance Proceeds" do not include "Insured Payments."
"Insured Payment": As determined separately for the Class A-1
Certificates and Class A-2 Certificates, the sum of (i) with respect to each
Distribution Date, the related Available Funds Shortfall and (ii) any related
unpaid Preference Amount.
17
23
"Interest Coverage Account": The Group I Interest Coverage
Account or the Group II Interest Coverage Account, as applicable.
"Interest Coverage Addition": With respect to Loan Group I and
Loan Group II, as to any Distribution Date, an amount equal to the lesser of
(A) interest accrued for the related Accrual Period on an amount equal
to (i) the related Original Pre-Funded Amount minus (ii) the aggregate
Principal Balance of any related Subsequent Mortgage Loans transferred
prior to the first day of the month in which such Distribution Date
occurs, calculated at a rate equal to the sum of (a)(1) with respect to
the Group I Certificates, the Group I Class A Pass-Through Rate for
such Distribution Date, or (2) with respect to the Group II
Certificates, the weighted average of the Group II Class A Pass-Through
Rates for such Distribution Date, weighted on the basis of the
Certificate Principal Balances of such Certificates, (b) ______%; and
(B) the related Available Funds Shortfall (calculated without regard to
the Interest Coverage Addition component of Group I Available Funds or
Group II Available Funds, as applicable).
"Interest Coverage Amount": With respect to Loan Group I and
Loan Group II, the amount to be paid by the Company to the Trustee for deposit
into the related Interest Coverage Account pursuant to Section 6.13(a) on the
Closing Date, which amount is $____________ for Loan Group I and
$_________________ for Loan Group II.
"Interest Determination Date": With respect to any Accrual
Period, the second London Business Day preceding the commencement of such
Accrual Period.
"Lifetime Cap": As to any Mortgage Loan in Loan Group I, the
maximum Mortgage Interest Rate set forth in the related Mortgage Note and
indicated in the Mortgage Loan Schedule, which rate may be applicable to such
Mortgage Loan at any time during the life of such Mortgage Loan.
"Lifetime Floor": As to any Mortgage Loan in Loan Group I the
minimum Mortgage Interest Rate set forth in the related Mortgage Note and
indicated in the Mortgage Loan Schedule, which rate may be applicable to such
Mortgage Loan at any time during the life of such Mortgage Loan.
"Liquidated Loan Loss": With respect to any Distribution Date,
the aggregate of the amount of losses with respect to each Mortgage Loan which
became a Liquidated Mortgage Loan during the Due Period preceding such
Distribution Date, equal to (i) the unpaid principal balance of each such
Liquidated Mortgage Loan, plus accrued interest thereon in accordance with the
amortization schedule at the time applicable thereto at the applicable Mortgage
Interest Rate from the Due Date as to which interest was last paid with respect
thereto through the last day of the month in which such Mortgage Loan became a
Liquidated Mortgage Loan, minus (ii) Net Liquidation Proceeds with respect to
such Liquidated Mortgage Loan.
"Liquidated Mortgage Loan": A Mortgage Loan with respect to
which the related Mortgaged Property has been acquired, liquidated or foreclosed
and with respect to which the Master Servicer determines that all Liquidation
Proceeds which it expects to recover have been recovered.
"Liquidation Expenses": Expenses incurred by the Master
Servicer or any Subservicer in connection with the liquidation of any defaulted
Mortgage Loan or property acquired in respect thereof (including, without
limitation, legal fees and expenses, committee or referee fees, and, if
applicable,
18
24
brokerage commissions and conveyance taxes), any unreimbursed amount expended by
the Master Servicer pursuant to Sections 5.05, 5.06 and 5.12 respecting the
related Mortgage Loan and any unreimbursed expenditures for real property taxes
or for property restoration or preservation of the related Mortgaged Property.
Liquidation Expenses shall not include any previously incurred expenses in
respect of an REO Mortgage Loan which have been netted against related REO
Proceeds.
"Liquidation Proceeds": Amounts received by the Master
Servicer (including Insurance Proceeds) in connection with the liquidation of
defaulted Mortgage Loans or property acquired in respect thereof, whether
through foreclosure, sale or otherwise, including payments in connection with
such Mortgage Loans received from the Mortgagor, other than amounts required to
be paid to the Mortgagor pursuant to the terms of the applicable Mortgage or to
be applied otherwise pursuant to law.
"Loan Repurchase Price": As defined in Section 2.04(b).
"Loan-to-Value Ratio or LTV": With respect to any Mortgage
Loan, the fraction, expressed as a percentage, the numerator of which is the
principal balance of such Mortgage Loan, as of the date of origination of the
Mortgage Loan, divided by the Appraised Value of the related Mortgaged Property.
"London Business Day": Any day on which banks in the City of
London, England are open and conducting transactions in United States dollars.
"Majority Certificateholders": With respect to each Loan
Group, the Holder or Holders of Class A Certificates evidencing Percentage
Interests in excess of 51% in the aggregate.
"Master Servicer": [_________________________________], a
_________________ corporation, or any successor appointed as herein provided.
"Master Servicer Remittance Amount": With respect to any
Master Servicer Remittance Date, an amount equal to the sum of (i) all
unscheduled collections of principal and interest on the Mortgage Loans
(including Principal Prepayments in Full and Curtailments, Net REO Proceeds and
Net Liquidation Proceeds, if any) collected by the Master Servicer during the
prior calendar month and all scheduled Monthly Payments due on the related Due
Date and received on or prior to the Business Day preceding such Master Servicer
Remittance Date, (ii) all Periodic Advances made by the Master Servicer with
respect to payments due to be received on the Mortgage Loans on the related Due
Date and (iii) any other amounts required to be placed in the Collection Account
by the Master Servicer pursuant to this Agreement but excluding the following:
(a) amounts received on particular Mortgage Loans as late
payments of principal or interest and respecting which the Master Servicer has
previously made an unreimbursed Periodic Advance;
(b) those portions of each payment of interest on a particular
Mortgage Loan which represent the Servicing Fee;
(c) that portion of Liquidation Proceeds and REO Proceeds
which represents any unpaid Servicing Fee;
(d) all income from Permitted Investments that is held in the
Collection Account for the account of the Master Servicer;
19
25
(e) all amounts in respect of late fees, assumption fees,
prepayment fees and similar fees;
(f) certain other amounts which are reimbursable to the Master
Servicer, as provided in this Agreement; and
(g) Net Foreclosure Profits.
"Master Servicer Remittance Date": With respect to any
Distribution Date, the 18th of the month in which such Distribution Date occurs,
or if such 18th day is not a Business Day, the Business Day preceding such 18th
day.
"Monthly Payment": As to any Mortgage Loan (including any REO
Mortgage Loan) and any Due Date, the scheduled payment of principal and interest
due thereon for such Due Date (after adjustment for any Curtailments and
Deficient Valuations occurring prior to such Due Date but before any adjustment
to such amortization schedule by reason of any bankruptcy, other than Deficient
Valuations or similar proceeding or any moratorium or similar waiver or grace
period).
"Moody's": Xxxxx'x Investors Service, Inc., or any successor
thereto.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first lien or second lien on the Mortgaged Property.
"Mortgage File": The mortgage documents listed in Exhibit C
attached hereto pertaining to a particular Mortgage Loan and any additional
documents required to be added to the Mortgage File pursuant to this Agreement;
provided that whenever the term "Mortgage File" is used to refer to documents
actually received by the Trustee, such term shall not be deemed to include such
additional documents required to be added unless they are actually so added.
"Mortgage Impairment Insurance Policy": As defined in Section
5.07.
"Mortgage Interest Rate": As to any Group I Loan, the per
annum rate at which interest accrues on the unpaid principal balance thereof, as
adjusted from time to time in accordance with the provisions of the related
Mortgage Note, which rate is (a) prior to the first related Rate Adjustment Date
occurring after the Cut-off Date, the initial Mortgage Interest Rate for such
Mortgage Loan indicated on the Mortgage Loan Schedule and (b) from and after
such first Rate Adjustment Date, the sum of the related Index applicable to the
most recent Rate Adjustment Date, and the Gross Margin, rounded as set forth in
such Mortgage Note, subject to the Periodic Cap, the Lifetime Cap and Lifetime
Floor set forth in the related Mortgage Note that may be applicable to such
Mortgage Loan at any time during the life of such Mortgage Loan. As to any Group
II Loan, the fixed per annum rate at which interest accrued on the unpaid
principal balance thereof, which rate is the Mortgage Interest Rate for such
Group II Loan indicated on the related Mortgage Loan Schedule.
"Mortgage Loan": An individual mortgage loan which is assigned
and transferred to the Trustee pursuant to this Agreement, together with the
rights and obligations of a holder thereof and payments thereon and proceeds
therefrom (other than payments of interest that accrued on each Mortgage Loan up
to and including the Due Date therefor occurring, with respect to the Mortgage
Loans prior to the Cut-off Date), the Mortgage Loans originally subject to this
Agreement being identified on the Mortgage Loan Schedule. As applicable,
Mortgage Loan shall be deemed to refer to the related REO Property.
20
26
"Mortgage Loan Group": The Group I Loans or Group II Loans.
References herein to "Mortgage Loan Group" when used with respect to any
Certificate shall mean (i) Group I Loans, in the case of the Group I
Certificates, and (ii) Group II Loans, in the case of the Group II Certificates.
"Mortgage Loan Interest Shortfall": With respect to any
Distribution Date, as to the Mortgage Loans in either Loan Group, the sum of (a)
any Civil Relief Act Interest Shortfalls in respect of such Mortgage Loans for
such Distribution Date and (b) any related Master Servicer Default Prepayment
Interest Shortfall. A "Master Servicer Default Prepayment Interest Shortfall"
will only exist on a Distribution Date with respect to which the Master Servicer
has defaulted on its obligations under Sections 5.20 and 6.09 with respect to
Prepayment Interest Shortfalls and on such a Distribution Date will equal, for
Loan Group I and Loan Group II in the aggregate, the excess of (i) the aggregate
maximum amount of Compensating Interest required pursuant to Sections 5.20 and
6.09 to have been paid by the Master Servicer or a Subservicer or netted against
the Master Servicer's aggregate Servicing Fee for such Distribution Date over
(ii) the amount of Compensating Interest actually paid by the Master Servicer or
a Subservicer or actually netted against the Master Servicer's aggregate
Servicing Fee for such Distribution Date.
"Mortgage Loan Schedule": The lists of the Mortgage Loans
transferred to the Trustee on or before the Closing Date or Subsequent Transfer
Date as part of the Trust Fund and attached hereto as Exhibits D-1 and D-2 and
delivered in computer readable format, which list shall set forth at a minimum
the following information as to each Mortgage Loan:
(i) the Mortgage Loan identifying number;
(ii) the city, state and zip code of the Mortgaged
Property;
(iii) the type of property;
(iv) the current Monthly Payment as of the Cut-off Date;
(v) the original number of months to maturity;
(vi) the scheduled maturity date;
(vii) the Principal Balance as of the Cut-off Date (with
respect to an Initial Mortgage Loan) or Subsequent
Cut-off Date (with respect to a Subsequent Mortgage
Loan);
(viii) the Loan-to-Value Ratio or Combined Loan-to-Value
Ratio at origination;
(ix) the Mortgage Interest Rate as of the Cut-off Date
(with respect to an Initial Mortgage Loan) or
Subsequent Cut-off Date (with respect to a Subsequent
Mortgage Loan);
(x) the Mortgage Interest Rate at origination;
(xi) the Gross Margin (with respect to Group I Loans) and
the frequency of the adjustment thereof;
21
27
(xii) the first Rate Adjustment Date (with respect to Group
I Loans) after the Cut-off Date (with respect to an
Initial Mortgage Loan) or Subsequent Cut-off Date
(with respect to a Subsequent Mortgage Loan);
(xiii) the first Rate Adjustment Date after origination and
the frequency of adjustment (with respect to Group I
Loans);
(xiv) the Lifetime Cap (with respect to Group I Loans);
(xv) the Lifetime Floor (with respect to Group I Loans);
(xvi) the Appraised Value;
(xvii) the stated purpose of the loan at origination;
(xviii) the type of occupancy at origination;
(xix) the documentation type (as described in the
Underwriting Guidelines);
(xx) the Periodic Cap (with respect to Group I Loans);
(xxi) the loan classification (as described in the
Underwriting Guidelines);
(xxii) the related Index (with respect to Group I Loans) and
the look-back period for such Mortgage Loan;
(xxiii) the Servicing Fee with respect to such Mortgage Loan,
expressed as a rate per annum; and
(xxiv) whether such Mortgage Loan is secured by a first lien
or second lien.
Such schedule may consist of multiple reports that collectively set forth all of
the information required.
"Mortgage Note": The original, executed note or other evidence
of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan.
"Mortgaged Property": The underlying property securing a
Mortgage Loan, consisting of a fee simple estate in a single parcel of land
improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Foreclosure Profits": As to any Distribution Date, an
amount equal to (i) the aggregate Foreclosure Profits with respect to such
Distribution Date minus (ii) Liquidated Loan Losses with respect to such
Distribution Date.
"Net Lifetime Cap": With respect to each Mortgage Loan in
Group I at any time of determination, a sum equal to (i) the Lifetime Cap on
such Mortgage Loan minus (ii) the sum of the per annum rates used to determine
the related Servicing Fee and Trustee Fee and the Premium Percentage.
22
28
"Net Liquidation Proceeds": As to any Liquidated Mortgage
Loan, Liquidation Proceeds net of Liquidation Expenses and net of any
unreimbursed Periodic Advances and unreimbursed Servicing Advances made by the
Master Servicer. For all purposes of this Agreement, Net Liquidation Proceeds
shall be allocated first to accrued and unpaid interest on the related Mortgage
Loan and then to the unpaid principal balance thereof.
"Net Mortgage Interest Rate": With respect to each Mortgage
Loan at any time of determination, a rate equal to (i) the Mortgage Interest
Rate on such Mortgage Loan minus (ii) the sum of the per annum rates used to
determine the related Servicing Fee and Trustee Fee and the Premium Percentage.
Any regular monthly computation of interest at such rate shall be based upon
annual interest at such rate on the applicable amount divided by twelve.
"Net REO Proceeds": As to any REO Mortgage Loan, REO Proceeds
net of any related expenses of the Master Servicer.
"Nonrecoverable Advances": With respect to any Mortgage Loan,
(a) any Periodic Advance or Servicing Advance previously made and not reimbursed
from late collections pursuant to Section 5.04(b), or (b) a Periodic Advance or
Servicing Advance proposed to be made in respect of a Mortgage Loan or REO
Property either of which, in the good faith business judgment of the Master
Servicer, as evidenced by an Officer's Certificate delivered to the Certificate
Insurer and the Trustee would not be ultimately recoverable pursuant to Sections
5.04 and Section 6.02.
"Non-United States Person": Any Person other than a United
States Person.
"Notional Amount": As of any Distribution Date, with respect
to the Class I S Certificates, an amount equal to the aggregate Principal
Balance of the Group I Loans immediately prior to such date. As of any
Distribution Date, with respect to the Class II S Certificates, an amount equal
to the aggregate Principal Balance of the Group II Loans immediately prior to
such date.
"Officer's Certificate": A certificate signed by the Chairman
of the Board, the President or a Vice President and the Treasurer, the Secretary
or one of the Assistant Treasurers or Assistant Secretaries of the Seller and/or
the Master Servicer, or the Company, as required by this Agreement.
"One-Month LIBOR": With respect to any Accrual Period, the
rate determined by the Trustee on the related Interest Determination Date on the
basis of the offered rates of the Reference Banks for one-month United States
dollar deposits, as such rates appear on the Telerate Screen Page 3750 as of
11:00 A.M., London, England time, on the Interest 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 One-Month LIBOR or comparable rates as may be reasonably selected by
the Trustee), the rate will be the Reference Bank Rate. If no such quotations
can be obtained and no Reference Bank Rate is available, One-Month LIBOR will be
One-Month LIBOR applicable to the preceding Distribution Date.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be counsel for the Seller, the Master Servicer, the Trustee,
a Certificateholder or a Certificateholder's prospective transferee or the
Certificate Insurer (including except as otherwise provided herein, in-house
counsel) reasonably acceptable to each addressee of such opinion and experienced
in matters relating to the subject of such opinion; except that any opinion of
counsel relating to (a) the qualification of the Trust Fund as a REMIC or (b)
compliance with the REMIC Provisions must be an opinion of counsel who (i) is in
fact independent of the Seller, the Master Servicer and the Trustee, (ii) does
not have any direct
23
29
financial interest or any material indirect financial interest in the Seller or
the Master Servicer or the Trustee or in an Affiliate thereof, (iii) is not
connected with the Seller or the Master Servicer or the Trustee as an officer,
employee, director or person performing similar functions and (iv) is reasonably
acceptable to the Certificate Insurer.
"Original Group I Pool Principal Balance": The Group I Pool
Principal Balance as of the Cut-off Date, which is $_______________________.
"Original Group II Pool Principal Balance": The Group II Pool
Principal Balance as of the Cut-off Date, which is $_______________________.
"Original Certificate Principal Balance": As of the Startup
Day and as to the Class A-1 Certificates, $______________________, as to the
Class A-2 Certificates, $___________________, and as to the each class of Class
S Certificates, $[0.00]. The Class R Certificates do not have an Original
Certificate Principal Balance.
"Original Pool Principal Balance": The Pool Principal Balance
as of the Cut-off Date, which is $_______________________.
"Original Pre-Funded Amount": With respect to Loan Group I and
Loan Group II, the amount deposited by the Company in the Pre-Funding Account on
the Closing Date, which amount is $_______________________ for Loan Group I and
$_____________________ for Loan Group II.
"Outstanding Mortgage Loan": As to any Due Date, a Mortgage
Loan (including an REO Mortgage Loan) which was not the subject of a Principal
Prepayment in Full prior to such Due Date, which did not become a Liquidated
Mortgage Loan prior to such Due Date, which was not repurchased by the Seller
prior to such Due Date pursuant to Section 2.04 and which was not repurchased by
an Affiliate of the Seller pursuant to Section 5.18.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
"Owner-Occupied Mortgaged Property": A Residential Dwelling as
to which (a) the related Mortgagor represented an intent to occupy as such
Mortgagor's primary, secondary or vacation residence at the origination of the
Mortgage Loan, and (b) the Seller has no actual knowledge that such Residential
Dwelling is not so occupied.
"Percentage Interest": With respect to a Class A Certificate
and any date of determination, the portion evidenced by such Certificate,
expressed as a percentage rounded to four decimal places, equal to a fraction
the numerator of which is the initial Authorized Denomination represented by
such Certificate and the denominator of which is the Original Certificate
Principal Balance of such Certificate. With respect to a Class S or Class R
Certificate and any date of determination, the portion evidenced thereby as
stated on the face of such Certificate.
"Periodic Advance": The aggregate of the advances with respect
to Mortgage Loans and REO Properties required to be made by the Master Servicer
on any Master Servicer Remittance Date pursuant to Section 5.21 hereof, the
amount of any such advances being equal to the sum of: (i) with respect to the
Mortgage Loans (other than Balloon Mortgage Loans with delinquent Balloon
Payments as described in clause (iii) below and other than REO Properties as
described in clauses (ii) and
24
30
(iv) below), all Monthly Payments (net of the related Servicing Fee) on such
Mortgage Loans that were delinquent as of the close of business on the Business
Day preceding the related Master Servicer Remittance Date, plus (ii) with
respect to each REO Property (other than any REO Property relating to a Balloon
Mortgage Loan with a delinquent Balloon Payment as described in clause (iv)
below), which REO Property was acquired during or prior to the related Due
Period and as to which an REO Disposition did not occur during the related Due
Period, an amount equal to the Monthly Payment (net of the related Servicing
Fee) for the most recently ended Due Period for the related Mortgage Loan minus
the net income from such REO Property transferred to the related Certificate
Account for such Distribution Date, plus (iii) with respect to each Balloon
Mortgage Loan with a delinquent Balloon Payment (other than any related REO
Property as described in clause (iv) below), an amount equal to the assumed
monthly principal and interest payment (net of the related Servicing Fee) that
would have been due on the related Due Date based on the original principal
amortization schedule for such Balloon Mortgage Loan, plus (iv) with respect to
each REO Property relating to a Balloon Mortgage Loan with a delinquent Balloon
Payment, which REO Property was acquired during or prior to the related Due
Period and as to which an REO Disposition did not occur during the related Due
Period, an amount equal to the assumed monthly principal and interest payment
(net of the related Servicing Fee) that would have been due on the related Due
Date based on the original principal amortization schedule for the related
Balloon Mortgage Loan minus the net income from such REO Property transferred to
the related Certificate Account for such Distribution Date, minus (v) the amount
of any advance otherwise required for such Distribution Date pursuant to clauses
(i) through (iv) above which the Master Servicer has determined to be a
Nonrecoverable Advance.
"Periodic Cap": With respect to each Group I Loan, the
provision in the related Mortgage Note that provides for an absolute maximum
amount by which the Mortgage Interest Rate therein may increase or decrease on a
Rate Adjustment Date above or below the Mortgage Interest Rate previously in
effect.
"Permitted Investments": As used herein, Permitted Investments
shall include the following:
(a) direct general obligations of, or obligations
fully and unconditionally guaranteed as to the timely payment
of principal and interest by, the United States or any agency
or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States and
any obligation of, or guaranties by, FHLMC or FNMA (other than
senior debt obligations and mortgage pass-through certificates
guaranteed by FHLMC or FNMA) shall be a Permitted Investment;
PROVIDED THAT at the time of such investment, such investment
is acceptable to the Certificate Insurer, but excluding any of
such securities whose terms do not provide for payment of a
fixed dollar amount upon maturity or call for redemption;
(b) federal funds and certificates of deposit, time
and demand deposits and banker's acceptances issued by any
bank or trust company incorporated under the laws of the
United States or any state thereof and subject to supervision
and examination by federal or state banking authorities,
provided that at the time of such investment or contractual
commitment providing for such investment the short-term debt
obligations of such bank or trust company at the date of
acquisition thereof have been rated in its highest rating by
each Rating Agency;
(c) commercial paper (having original maturities of
not more than 180 days) rated in its highest rating by each
Rating Agency;
25
31
(d) investments in money market funds rated in its
highest rating by each Rating Agency; and
(e) investments approved by the Rating Agencies and
the Certificate Insurer in writing delivered to the Trustee;
provided that each such Permitted Investment shall be a "permitted investment"
within the meaning of Section 860G(a)(5) of the Code and that no instrument
described hereunder shall evidence either the right to receive (x) only interest
with respect to the obligations underlying such instrument or (y) both principal
and interest payments derived from obligations underlying such instrument and
the interest and principal payments with respect to such instrument provided a
yield to maturity at par greater than [120]% of the yield to maturity at par of
the underlying obligations; and provided, further, that no instrument described
hereunder may be purchased at a price greater than par.
"Permitted Transferee": Any transferee of a Class R
Certificate other than a Non-United States Person or Disqualified Organization.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, national banking association,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan": Any employee benefit plan and certain other retirement
plans and arrangements, including individual retirement accounts and annuities,
and Xxxxx plans, and bank collective investment funds and insurance company
general or separate accounts in which such plans, accounts or arrangements are
invested, that are subject to the prohibited transaction and fiduciary
responsibility provisions of ERISA and Section 4975 of the Code.
["Policy Business Day": A Business Day as defined in the
Certificate Insurance Policy.]
"Pool Principal Balance": The sum of the Group I Pool
Principal Balance and the Group II Pool Principal Balance as of any date of
determination.
"Pool Strip Rate": With respect to the Class I S Certificates
and the Mortgage Loans in Loan Group I, a per annum rate equal to the weighted
average of the related Net Mortgage Interest Rates, weighted on the basis of the
related Principal Balances of such Mortgage Loans at the beginning of the
related Due Period, minus the Group I Class A Pass-Through Rate. With respect to
the Class II S Certificates and the Mortgage Loans in Loan Group II, a per annum
rate equal to the related Net Mortgage Interest Rate minus ______%. The Pool
Strip Rates are also designated on the related Mortgage Loan Schedule as the
"Class I S Strip" or the "Class II S Strip" as applicable for such Mortgage Loan
and the related Class S Certificates.
"Preference Amount": Any amount previously distributed to a
Class A Certificateholder that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
"Preference Claim": As defined in Section 6.04(f).
"Pre-Funding Account": The Group I Pre-Funding Account or the
Group II Pre-Funding Account, as applicable.
26
32
"Premium Amount": With respect to (i) the first two
Distribution Dates, $___________, and (ii) the third Distribution Date and each
Distribution Date thereafter, the product of 1/12 of the Premium Percentage and
the Certificate Principal Balance for Class A-1 Certificates and the Class A-2
Certificates, as applicable, immediately prior to the related Distribution Date.
"Premium Exhibit": The document attached hereto as Exhibit R.
"Premium Percentage": With respect to any Group I Loan or
Group II Loan, the rate per annum set forth in the Premium Exhibit.
"Prepayment Assumption": With respect to (i) the Group I
Certificates, a constant prepayment rate of [25]% and (ii) the Group II
Certificates, a [115]% Prepayment Assumption (i.e. a [100]% Prepayment
Assumption multiplied by [1.15]), used solely for determining the accrual of
original issue discount, market discount and premium, if any, on the
Certificates for federal income tax purposes. A [100]% Prepayment Assumption
assumes a constant prepayment rate of [4]% per annum for the first month,
increasing each month by an additional approximate [1.45]% (precisely [16/11])
(expressed as a percentage per annum) until such rate reaches [20.00]% (on the
twelfth month) and remaining level at [20.00]% thereafter.
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was the subject during the
related Due Period of a Principal Prepayment in Full or Curtailment, an amount
equal to (a) 30 days' interest on the Principal Balance of such Mortgage Loan at
a per annum rate equal to the Mortgage Interest Rate (or at such lower rate as
may be in effect for such Mortgage Loan pursuant to application of the Civil
Relief Act, any Deficient Valuation and/or any Debt Service Reduction) minus the
rate at which the Servicing Fee is calculated minus (b) the amount of interest
actually remitted by the Mortgagor in connection with such Principal Prepayment
in Full or Curtailment less the Servicing Fee for such Mortgage Loan in such
month.
"Principal Balance": As to any Mortgage Loan and Distribution
Date, the principal balance of such Mortgage Loan as of the Due Date preceding
such date of determination as specified for such Due Date in the amortization
schedule (before any adjustment to such amortization schedule by reason of any
bankruptcy (other than Deficient Valuations) or similar proceeding or any
moratorium or similar waiver or grace period) after giving effect to Principal
Prepayments in Full or Curtailments received prior to such Due Date, Deficient
Valuations incurred prior to such Due Date, to any Curtailments applied by the
Master Servicer in reduction of the unpaid principal balance of such Mortgage
Loan as of such Due Date and to the payment of principal due on such Due Date
and irrespective of any delinquency in payment by the related Mortgagor. The
Principal Balance of a Mortgage Loan which becomes a Liquidated Mortgage Loan
prior to such Due Date shall be zero.
"Principal Prepayment in Full": Any payment or other recovery
of principal on a Mortgage Loan equal to the outstanding principal balance
thereof, received in advance of the final scheduled Due Date which is not
intended as an advance payment of a scheduled Monthly Payment.
"Purchase Agreement": The Mortgage Loan Purchase Agreement,
dated as of the date hereof, between the Seller and the Company relating to the
sale of the Mortgage Loans to the Company.
"Qualified Mortgage": "Qualified Mortgage" shall have the
meaning set forth from time to time in the definition thereof at Section
860G(a)(3) of the Code (or any successor statute thereto).
27
33
"Qualified Substitute Mortgage Loan": A mortgage loan or
mortgage loans substituted for a Deleted Mortgage Loan pursuant to Section 2.04
or 3.03 hereof, which (a)(i) with respect to a Group I Loan, has or have the
same interest rate index, a margin over such index and a maximum interest rate
at least equal to those applicable to the Deleted Mortgage Loan and (ii) with
respect to a Group II Loan, has the same or greater interest rate, (b) relates
or relate to a detached one-family residence or to the same type of Residential
Dwelling as the Deleted Mortgage Loan and in each case has or have the same or a
better lien priority as the Deleted Mortgage Loan and has the same occupancy
status or is an Owner Occupied Mortgaged Property, (c) matures or mature no
later than (and not more than one year earlier than) the Deleted Mortgage Loan
(except during the first 90 days after the Cut-off Date), (d) has or have a
Loan-to-Value Ratio or Loan-to-Value Ratios (or Combined Loan-to-Value Ratio or
Combined Loan-to-Value Ratios, with respect to a Second Mortgage Loan) at the
time of such substitution no higher than the Loan-to-Value Ratio (or Combined
Loan-to-Value Ratio, with respect to a Second Mortgage Loan) of the Deleted
Mortgage Loan, (e) has or have a principal balance or principal balances (after
application of all payments received on or prior to the date of substitution)
not substantially less and not more than the Principal Balance of the Deleted
Mortgage Loan as of such date, (f) satisfies or satisfy the criteria set forth
from time to time in the definition of "qualified replacement mortgage" at
Section 860G(a)(4) of the Code (or any successor statute thereto) and (g)
complies or comply as of the date of substitution with each representation and
warranty set forth in Sections 3.01 and 3.02 of the Purchase Agreement.
"Rate Adjustment Date": The date on which the Mortgage
Interest Rate is adjusted with respect to each Group I Loan. The first Rate
Adjustment Date for each Group I Loan is set forth on the Mortgage Loan
Schedule.
"Rating Agency": [S&P, DCR or Xxxxx'x].
"Record Date": With respect to any Distribution Date, the
close of business on the last Business Day of the month immediately preceding
the month of such Distribution Date.
"Reference Bank Rate": With respect to any Accrual Period, as
follows: 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 which are offered by the Reference Banks as of 11:00 A.M., London,
England time, on the Interest Determination Date to prime banks in the London
interbank market for a period of one month in amounts approximately equal to the
aggregate outstanding Certificate Principal Balance of the Class A Certificates;
PROVIDED that at least two such Reference Banks provide such rate. If fewer than
two offered rates appear, the Reference Bank Rate will be the arithmetic mean of
the rates quoted by one or more major banks in New York City, selected by the
Trustee, as of 11:00 a.m., New York 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 aggregate outstanding Certificate Principal Balance of the Class A
Certificates. If no such quotations can be obtained, the Reference Bank Rate
shall be the Reference Bank Rate applicable to the preceding Distribution Date.
"Reference Banks": [Bankers Trust Company, Barclay's Bank PLC
and National Westminster Bank PLC].
"Released Mortgaged Property Proceeds": As to any Mortgage
Loan, proceeds received by the Master Servicer in connection with (a) a taking
of an entire Mortgaged Property by exercise of the power of eminent domain or
condemnation or (b) any release of part of the Mortgaged Property from the lien
of the related Mortgage, whether by partial condemnation, sale or otherwise;
which are not
28
34
released to the Mortgagor in accordance with applicable law, Accepted Servicing
Practices and this Agreement.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of Subchapter M of Chapter I of the Code, and related
provisions, and temporary and final regulations promulgated thereunder and
published rulings, notices and announcements, as the foregoing may be in effect
from time to time.
"REO Acquisition": The acquisition of any REO Property
pursuant to Section 5.12.
"REO Disposition": The final sale by the Master Servicer of a
Mortgaged Property acquired by the Master Servicer in foreclosure or by deed in
lieu of foreclosure.
"REO Mortgage Loan": Any Mortgage Loan which is not a
Liquidated Mortgage Loan and as to which the indebtedness evidenced by the
related Mortgage Note is discharged and the related Mortgaged Property is held
as part of the Trust Fund.
"REO Proceeds": Proceeds received in respect of any REO
Mortgage Loan (including, without limitations, proceeds from the rental of the
related Mortgaged Property).
"REO Property": As described in Section 5.12.
"Representation Letter": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class A
Certificates registered in the Certificate Register under the nominee name of
the Depository.
"Request for Release": A request for release in substantially
the form attached as Exhibit H hereto.
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/16%) of the three-month United States dollar lending rates which
New York City banks selected by the Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Trustee can determine no
such arithmetic mean, the lowest three-month United States dollar lending rate
which New York City banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.
"Residential Dwelling": A one- to four-family dwelling, a unit
in a planned unit development, a unit in a condominium development, a townhouse
or a manufactured housing unit which is non-mobile.
"Responsible Officer": When used with respect to the Trustee,
any officer assigned to the Corporate Trust Division (or any successor thereto),
including any Vice President, Senior Trust Officer, Trust Officer, Assistant
Trust Officer, any Assistant Secretary, any trust officer or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and to whom, with respect to a particular
matter, such matter is referred because of
29
35
such officer's knowledge of and familiarity with the particular subject. When
used with respect to the Seller or the Master Servicer, the President or any
Vice President, Assistant Vice President, or any Secretary or Assistant
Secretary.
"S&P": Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc. or any successor thereto.
"Second Mortgage Loan": Any Mortgage Loan secured by a second
lien on the related Mortgaged Property.
"Seller": ___________________________________, or its
successor.
"Senior Mortgage Loan": With respect to any Second Mortgage
Loan, a mortgage loan on the related Mortgaged Property that is senior to the
lien provided by such Second Mortgage Loan.
"Servicing Account": The account created and maintained
pursuant to Section 5.09.
"Servicing Advances": All reasonable and customary
"out-of-pocket" costs and expenses relating to a borrower default or delinquency
or other unanticipated event incurred by the Master Servicer in the performance
of its servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property including,
without limitation, taxes and insurance costs, (b) any enforcement or judicial
proceedings, including foreclosures, (c) the management and liquidation of the
REO Property, including reasonable fees paid to any independent contractor in
connection therewith, (d) compliance with the obligations under Sections 5.02
(limited solely to the reasonable and customary out-of-pocket expenses of the
subservicer), 5.05, 5.07, 5.09 or 5.10, all of which reasonable and customary
out-of-pocket costs and expenses are reimbursable to the Master Servicer to the
extent provided in Section 5.04(a) and (b).
"Servicing Compensation": The Servicing Fee and other amounts
to which the Master Servicer is entitled pursuant to Section 5.14.
"Servicing Fee": As to each Mortgage Loan, the annual fee
payable to the Master Servicer and the related Subservicer, if any, as indicated
on the related Mortgage Loan Schedule. Such fee shall be _______% per annum.
Such fee shall be calculated and payable monthly only from the amounts received
in respect of interest on such Mortgage Loan and shall be computed on the basis
of the same principal amount and for the period respecting which any related
interest payment on a Mortgage Loan is computed. The Servicing Fee includes any
servicing fees owed or payable to any Subservicer.
"Servicing Officer": Any officer of the Master Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans whose name and specimen signature appear on a list of servicing
officers furnished to the Trustee and the Certificate Insurer by the Master
Servicer, as such list may from time to time be amended.
"Startup Day": The day designated as such pursuant to Section
10.01(b) hereof.
"Subsequent Cut-off Date": With respect to those Subsequent
Mortgage Loans which are sold to the Trust Fund pursuant to a Subsequent
Transfer Instrument, the close of business on the day prior to the related
Subsequent Transfer Date.
30
36
"Subsequent Mortgage Loan": A Mortgage Loan sold by the
Company to the Trust Fund pursuant to Section 2.08, such Mortgage Loan being
identified on the Mortgage Loan Schedule attached to a Subsequent Transfer
Instrument.
"Subsequent Transfer Date": With respect to each Subsequent
Transfer Instrument, the date on which the related Subsequent Mortgage Loans are
sold to the Trust Fund.
"Subsequent Transfer Instrument": Each Subsequent Transfer
Instrument dated as of a Subsequent Transfer Date executed by the Trustee and
the Company substantially in the form of Exhibit N, by which Subsequent Mortgage
Loans are sold to the Trust Fund.
"Subservicer": Any Person with whom the Master Servicer has
entered into a Subservicing Agreement and who satisfies the requirements set
forth in Section 5.02(a) hereof in respect of the qualification of a
Subservicer.
"Subservicing Agreement": Any agreement between the Master
Servicer and any Subservicer relating to subservicing and/or administration of
certain Mortgage Loans as provided in Section 5.02, a copy of which shall be
delivered, along with any modifications thereto, to the Trustee and the
Certificate Insurer.
"Substitution Adjustment": As to any date on which a
substitution occurs pursuant to Sections 2.04 or 3.03, the amount (if any) by
which the aggregate principal balances (after application of principal payments
received on or before the date of substitution of any Qualified Substitute
Mortgage Loans as of the date of substitution), are less than the aggregate of
the Principal Balances of the related Deleted Mortgage Loans.
"Tax Matters Person": The Person or Persons appointed pursuant
to Section 10.01(c) from time to time to act as the "tax matters person" (within
the meaning of the REMIC Provisions) of the Trust Fund.
"Tax Return": The federal income tax return on Internal
Revenue Service Form 1066, "U.S. Real Estate Mortgage Investment Conduit Income
Tax Return," including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to its classification as a REMIC
under the REMIC Provisions, together with any and all other information reports
or returns that may be required to be furnished to the Certificateholders or
filed with the Internal Revenue Service or any other governmental taxing
authority under any applicable provision of federal, state or local tax laws in
connection with the Trust Fund.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
"Transfer Affidavit And Agreement": As defined in Section
4.02(j).
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer any
Ownership Interest in a Certificate.
31
37
"Trustee": [_________________________________], or its
successor in interest, or any successor trustee appointed as herein provided.
"Trustee Fee": As to any Distribution Date, the fee payable to
the Trustee in respect of its services as Trustee that accrues at a monthly rate
equal to 1/12 of _____% of the sum of the Principal Balance of each Mortgage
Loan, the Group I Pre-Funded Amount and the Group II Pre-Funded Amount as of the
immediately preceding Due Date.
"Trustee Remittance Report": As defined in Section 6.07.
"Trust Fund": The segregated pool of assets subject hereto,
constituting the trust created hereby and to be administered hereunder,
consisting of: (a) such Mortgage Loans as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto and all collections
thereon and proceeds thereof after the Cut-off Date, (b) such assets as from
time to time are identified as deposited in the Certificate Accounts, (c) such
assets as from time to time are identified as REO Property and collections
thereon and proceeds thereof, assets that are deposited in the Accounts,
including amounts on deposit in the Accounts and invested in Permitted
Investments, (d) the Trustee's rights with respect to the Mortgage Loans under
all insurance policies required to be maintained pursuant to this Agreement
(including the Certificate Insurance Policy) and any Insurance Proceeds (and any
proceeds of the Certificate Insurance Policy), (e) Liquidation Proceeds, (f)
Released Mortgaged Property Proceeds, (g) the representations and warranties of
the Seller pursuant to the Purchase Agreement and (h) amounts on deposit in the
Interest Coverage Accounts and the Pre-Funding Accounts.
"12 Month Loss Amount": With respect to any Distribution Date,
an amount equal to the aggregate of all Liquidation Loan Losses on the Mortgage
Loans which became Liquidated Mortgage Loans during the 12 preceding Due
Periods.
"UCC": The Uniform Commercial Code in effect in the applicable
jurisdiction.
"UCC Financing Statement": A financing statement executed and
filed pursuant to the UCC.
"Underwriter": Xxxxxx Xxxxxxx & Co. Incorporated.
"Underwriting Guidelines": The underwriting guidelines of the
Seller.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States.
"Unpaid REO Amortization": As to any REO Mortgage Loan and any
month, the aggregate of the installments of principal and accrued interest
(adjusted to the related Net Mortgage Interest Rate) deemed to be due in such
month and in any prior months that remain unpaid, calculated in accordance with
Section 5.12.
Section 1.02. Provisions of General Application. (c) All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
32
38
(d) The terms defined in this Article include the plural as
well as the singular.
(e) The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole. All references to
Articles and Sections shall be deemed to refer to Articles and Sections of this
Agreement.
(f) Reference to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statutes.
(g) All calculations of interest (other than with respect to
the Mortgage Loans, or as otherwise specifically set forth herein) provided for
herein shall be made on the basis of a 360-day year and the actual number of
days elapsed in the related period. All calculations of interest with respect to
any Mortgage Loan provided for herein shall be made in accordance with the terms
of the related Mortgage Note and Mortgage or, if such documents do not specify
the basis upon which interest accrues thereon, on the basis of a 360-day year
and the actual number of days elapsed in the related period, to the extent
permitted by applicable law.
(h) Any Mortgage Loan payment is deemed to be received on the
date such payment is actually received by the Master Servicer, provided,
however, that for purposes of calculating distributions on the Certificates,
prepayments with respect to any Mortgage Loan are deemed to be received on the
date they are applied in accordance with customary servicing practices
consistent with the terms of the related Mortgage Note and Mortgage to reduce
the outstanding principal balance of such Mortgage Loan on which interest
accrues.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance Of Mortgage Loans; Priority And
Subordination Of Ownership Interests. (i) The Company does hereby sell,
transfer, assign, set over and convey to the Trustee without recourse but
subject to the provisions in this Section 2.01 and the other terms and
provisions of this Agreement, all of the right, title and interest of the
Company in and to the Mortgage Loans (other than payment of interest and
principal due thereon on or before the Cut-off Date), and all other assets
included or to be included in the Trust Fund for the benefit of the
Certificateholders and the Certificate Insurer. In connection with such transfer
and assignment, and pursuant to Section ______ of the Purchase Agreement, the
Company does hereby also irrevocably transfer, assign, set over and otherwise
convey to the Trustee all of its rights under the Purchase Agreement including,
without limitation, its right to exercise the remedies created by Sections _____
and _______ of the Purchase Agreement for breaches of representations and
warranties, agreements and covenants of the Seller contained in Sections
_________ and ________ of the Purchase Agreement.
(j) The rights of the Certificateholders to receive payments
with respect to the Mortgage Loans in respect of the Certificates, and all
ownership interests of the Certificateholders in such payments, shall be as set
forth in this Agreement. In this regard, (i) all rights of the Class R and Class
I S Certificateholders to receive payments in respect of the Class R and Class I
S Certificates, are subject and subordinate to the preferential rights of the
Class A-1 Certificateholders to receive payments in respect of the Class A-1
Certificates and to the Certificate Insurer's rights to be reimbursed for Group
I
33
39
Insured Payments together with interest thereon at the rate specified herein or
in the Insurance Agreement and (ii) all rights of the Class R and Class II S
Certificateholders to receive payments in respect of the Class R and Class II S
Certificates, are subject and subordinate to the preferential rights of the
Class A-2 Certificateholders to receive payments in respect of the Class A-2
Certificates and to the Certificate Insurer's rights to be reimbursed for Group
II Insured Payments together with interest thereon at the rate specified herein
or in the Insurance Agreement. In accordance with the foregoing, (i) the
ownership interest of the Class R and Class I S Certificateholders in amounts
deposited in the Group I Certificate Account from time to time shall not vest
unless and until such amounts are distributed in respect of the Class R and
Class I S Certificates in accordance with the terms of this Agreement and (ii)
the ownership interest of the Class R and Class II S Certificateholders in
amounts deposited in the Group II Certificate Account from time to time shall
not vest unless and until such amounts are distributed in respect of the Class R
and Class II S Certificates in accordance with the terms of this Agreement.
(k) It is intended that the conveyance of the Mortgage Loans
by the Company to the Trustee as provided in this Section be, and be construed
as, a sale of the Mortgage Loans by the Company to the Trustee for the benefit
of the Certificateholders. It is, further, not intended that such conveyance be
deemed a pledge of the Mortgage Loans by the Company to the Trustee to secure a
debt or other obligation of the Company. However, in the event that the Mortgage
Loans are held to be property of the Company, or if for any reason this
Agreement is held or deemed to create a security interest in the Mortgage Loans,
then it is intended that, (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the New York
Uniform Commercial Code and the Uniform Commercial Code of any other applicable
jurisdiction; (b) the conveyance provided for in this Section shall be deemed to
be (1) a grant by the Company to the Trustee of a security interest in all of
the Company's right (including the power to convey title thereto), title and
interest, whether now owned or hereafter acquired, in and to (a) the Mortgage
Loans, including the Mortgage Notes, the Mortgages, any related insurance
policies and all other documents in the related Mortgage Files, (B) all amounts
payable to the holders of the Mortgage Loans in accordance with the terms
thereof and (C) all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including
without limitation all amounts from time to time held or invested in the
Certificate Accounts or the Collection Account, whether in the form of cash,
instruments, securities or other property and (2) an assignment by the Company
to the Trustee of any security interest in any and all of the Seller's right
(including the power to convey title thereto), title and interest, whether now
owned or hereafter acquired, in and to the property described in the foregoing
clauses (1)(a) through (C) granted by the Seller to the Company pursuant to the
Purchase Agreement; (c) the possession by the Trustee or its agent of Mortgage
Notes and such other items of property as constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party" or possession by a purchaser or a person designated by such
secured party, for purposes of perfecting the security interest pursuant to the
New York Uniform Commercial Code and the Uniform Commercial Code of any other
applicable jurisdiction (including, without limitation, Sections 9-305, 8-313 or
8-321 thereof); and (d) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law. The
Company and, at the written direction of the Company, the Seller and the Trustee
shall, to the extent consistent with this Agreement, take such reasonable
actions as may be necessary to ensure that, if this Agreement were deemed to
create a security interest in the Mortgage Loans, such security interest would
be deemed to be a perfected security interest of first priority under applicable
law and will be maintained as such throughout the term of the Agreement.
34
40
Section 2.02. Possession Of Mortgage Files; Access To Mortgage
Files. (l) Upon the issuance of the Certificates, the ownership of each Mortgage
Note, the Mortgage and the contents of the Mortgage File related to each Initial
Mortgage Loan is vested in the Trustee for the benefit of the Certificateholders
and the Certificate Insurer.
(m) Pursuant to Section ________ of the Purchase Agreement,
the Company has delivered or caused to be delivered the Mortgage File related to
each Initial Mortgage Loan to the Trustee.
(n) The Trustee may enter into a custodial agreement pursuant
to which the Trustee will appoint a custodian (a "Custodian") to hold the
Mortgage Files in trust for the benefit of all present and future
Certificateholders and the Certificate Insurer; provided, however, that the
custodian so appointed shall in no event be the Company or the Master Servicer
or any Person known to a Responsible Officer of the Trustee to be an Affiliate
of the Company or the Master Servicer. The Trustee hereby appoints
[_________________________________] as the initial Custodian.
(o) The Custodian shall afford the Company, the Certificate
Insurer and the Master Servicer reasonable access to all records and
documentation regarding the Mortgage Loans relating to this Agreement, such
access being afforded at customary charges, upon reasonable request and during
normal business hours at the offices of the Custodian.
Section 2.03. Delivery Of Mortgage Loan Documents And
Certificate Insurance Policy. (p) In connection with each conveyance pursuant to
Section 2.01 hereof, the Company has delivered or does hereby agree to deliver
or cause to be delivered to the Trustee on or before the Closing Date, the
Certificate Insurance Policy, the Mortgage Loan Schedule and each of the
following documents for each Mortgage Loan sold by the Seller to the Company and
sold by the Company to the Trust Fund:
(i) The original Mortgage Note bearing all
intervening endorsements showing a complete chain of endorsements from
the originator of such Mortgage Loan to the Seller, endorsed by the
Seller without recourse in the following form: "Pay to the order of ,
without recourse" and signed in the name of the Seller by an authorized
officer;
(ii) The original Mortgage with evidence of recording
indicated thereon;
(iii) An original assignment of the original
Mortgage, in suitable form for recordation in the jurisdiction in which
the related Mortgaged Property is located, such assignment to be in
blank and signed in the name of the Seller by an authorized officer;
(iv) The originals of all intervening assignments of
the Mortgage (with evidence of recording thereon) showing a complete
chain of assignments from the originator of such Mortgage Loan to the
Seller;
(v) Any assumption, modification (with evidence of
recording thereon), consolidation or extension agreements;
(vi) The original policy of title insurance (or a
commitment for title insurance, if the policy is being held by the
title insurance company pending recordation of the Mortgage); and
35
41
(vii) The certificate of primary mortgage guaranty
insurance, if any, issued with respect to such Mortgage Loan;
PROVIDED, HOWEVER, that as to certain Mortgages or assignments thereof which
have been delivered or are being delivered to recording offices for recording
and have not been returned to the Seller in time to permit their delivery
hereunder at the time of such transfer, in lieu of delivering such original
documents, the Company shall deliver to the Trustee a true copy thereof with a
certification by the Seller on the face of such copy substantially as follows:
"certified true and correct copy of original which has been transmitted for
recordation". The Company will cause the Seller to deliver such original
documents, together with any related policy of title insurance not previously
delivered, on behalf of the Company to the Trustee promptly after they are
received, but in any event no later than 120 days after the Closing Date. The
Company agrees, at its own expense, to complete each assignment to the Trustee
and to record (or to provide the Trustee with evidence of recordation thereof)
each assignment referred to in clause (iii) above promptly after the Closing
Date in the appropriate public office for real property records, provided that
such assignments are redelivered by the Trustee to the Seller upon the Seller's
written request and at the Seller's expense, unless the Seller (at its expense)
furnishes to the Trustee, the Certificate Insurer and the Rating Agencies an
unqualified Opinion of Counsel reasonably acceptable to the Trustee to the
effect that recordation of such assignment is not necessary under applicable
state law to preserve the Trustee's interest in the related Mortgage Loan
against the claim of any subsequent transferee of such Mortgage Loan or any
successor to, or creditor of, the Seller.
Within a period of 14 days from the Closing Date, the
Trustee shall complete the endorsement of each Mortgage Note such that the final
endorsement appears in the following form:
"Pay to the order of [_________________________________], as
Trustee under that certain Pooling and Servicing Agreement
dated as of ______________________, 19____, for
______________________________, Mortgage Loan Asset-Backed
Pass-Through Certificates, Series 199__-__, without recourse."
Within a period of 14 days from the Closing Date, the
Trustee shall also complete each Assignment of Mortgage such that the final
Assignment of Mortgage appears in the following form:
"[_________________________________], as Trustee under that
certain Pooling and Servicing Agreement dated as of
______________________, 19____, for
_______________________________________________, Mortgage Loan
Asset Backed Pass-Through Certificates, Series 199__- __."
(q) In the event that any such original document is required
pursuant to the terms of this Section 2.03 to be a part of a Mortgage File, such
document shall be delivered promptly by the Company to the Trustee. In acting as
custodian of any such original document, the Master Servicer agrees further that
it does not and will not have or assert any beneficial ownership interest in the
Mortgage Loans or the Mortgage Files.
Section 2.04. Acceptance By Trustee Of The Trust Fund; Certain
Substitutions; Certification By Trustee. (r) The Trustee agrees to execute and
deliver to the Company, the Certificate Insurer, the Master Servicer and the
Seller on or prior to the Closing Date an acknowledgment of receipt of the
Certificate Insurance Policy and, with respect to each Mortgage Loan, on or
prior to the Closing Date, an acknowledgement of receipt of the original
Mortgage Note (with any exceptions noted), in the
36
42
form attached as Exhibit E hereto and declares that it will hold such documents
and any amendments, replacements or supplements thereto, as well as any other
assets included in the definition of Trust Fund and delivered to the Trustee, as
Trustee in trust upon and subject to the conditions set forth herein for the
benefit of the Certificateholders and the Certificate Insurer. The Trustee
agrees, for the benefit of the Certificateholders and the Certificate Insurer,
to review (or cause to be reviewed) each Mortgage File within 45 Business Days
after the Closing Date or related Subsequent Transfer Date (with respect to the
Mortgage Loans), and to deliver to the Seller, the Master Servicer, the Company
and the Certificate Insurer a certification in the form attached hereto as
Exhibit F to the effect that, as to each Mortgage Loan or Subsequent Mortgage
Loan listed in the related Mortgage Loan Schedule (other than any Mortgage Loan
or Subsequent Mortgage Loan paid in full or any Mortgage Loan or Subsequent
Mortgage Loan specifically identified in such certification as not covered by
such certification), (i) all documents required to be delivered to it pursuant
to Section 2.03 are in its possession, (ii) each such document has been reviewed
by it and has not been mutilated, damaged, torn or otherwise physically altered
(handwritten additions, changes or corrections shall not constitute physical
alteration if initialled by the Mortgagor), appears regular on its face and
relates to such Mortgage Loan or Subsequent Mortgage Loan, and (iii) based on
its examination and only as to the foregoing documents, the information set
forth on the Mortgage Loan Schedule as to the information set forth in (i),
(ii), (v), (vi), (x), (xi), (xiii), (xiv), (xv), (xx) and (xxii) of the
definition of "Mortgage Loan Schedule" set forth herein accurately reflects the
information set forth in the Mortgage File delivered on such date. The Trustee
makes no representations as to and shall not be responsible to verify (i) the
validity, legality, enforceability, sufficiency, due authorization,
recordability or genuineness of any of the documents contained in each Mortgage
File or of any of the Mortgage Loans or Subsequent Mortgage Loans or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan or Subsequent Mortgage Loan.
By ________________, 199____, or within 90 days following the
related Subsequent Transfer Date, if later, the Trustee shall deliver (or cause
to be delivered) to the Master Servicer, the Seller, the Company and the
Certificate Insurer a final certification in the form attached hereto as Exhibit
G to the effect that, as to each Mortgage Loan or Subsequent Mortgage Loan
listed in the Mortgage Loan Schedule (other than any Mortgage Loan or Subsequent
Mortgage Loan paid in full or any Mortgage Loan or Subsequent Mortgage Loan
specifically identified in such certification as not covered by such
certification), (i) all documents required to be delivered to it pursuant to
Section 2.03 are in its possession, (ii) each such document has been reviewed by
it and has not been mutilated, damaged, torn or otherwise physically altered
(handwritten additions, changes or corrections shall not constitute physical
alteration if initialled by the Mortgagor), appears regular on its face and
relates to such Mortgage Loan or Subsequent Mortgage Loan, and (iii) based on
its examination and only as to the foregoing documents, the information set
forth in (i), (ii), (v), (vi), (x), (xi), (xiii), (xiv), (xv), (xx) and (xxii)
of the definition of "Mortgage Loan Schedule" set forth herein accurately
reflects the information set forth in the Mortgage File delivered on such date.
(s) If the Certificate Insurer or the Trustee during the
process of reviewing the Mortgage Files finds any document constituting a part
of a Mortgage File which is not executed, has not been received, is unrelated to
the Mortgage Loan identified in the related Mortgage Loan Schedule, or does not
conform to the requirements of Section 2.03 or the description thereof as set
forth in the related Mortgage Loan Schedule, the Trustee or the Certificate
Insurer, as applicable, shall promptly so notify the Master Servicer, the
Seller, the Certificate Insurer and the Trustee. In performing any such review,
the Trustee may conclusively rely on the Seller as to the purported genuineness
of any such document and any signature thereon. It is understood that the scope
of the Trustee's review of the Mortgage Files is limited solely to confirming
that the documents listed in Section 2.03 have been executed and received and
relate to the Mortgage Files identified in the related Mortgage Loan Schedule
and such documents conform to the standard set forth in clause (ii) of the
paragraph directly above. The Trustee shall request
37
43
that the Seller cure any such defect within 60 days from the date on which the
Seller was notified of such defect, and if the Seller does not cure such defect
in all material respects during such period, request that the Seller (i)
substitute in lieu of such Mortgage Loan a Qualified Substitute Mortgage Loan in
the manner and subject to the conditions set forth in Section 3.03 or (ii)
purchase such Mortgage Loan on the next succeeding Master Servicer Remittance
Date at a purchase price equal to the actual stated principal balance of such
Mortgage Loan as of the date of purchase, plus all accrued and unpaid interest
on such principal balance computed at the Mortgage Interest Rate, plus the
amount of any unpaid Servicing Fees, unreimbursed Periodic Advances and
unreimbursed Servicing Advances made by the Master Servicer with respect to such
Mortgage Loan, which purchase price shall be deposited in the Collection Account
on the same Business Day, after deducting therefrom any amounts received in
respect of such repurchased Mortgage Loan or Loans and being held in the
Collection Account for future distribution to the extent such amounts have not
yet been applied to principal or interest on such Mortgage Loan (the "Loan
Repurchase Price"). It is understood and agreed that the obligation of the
Seller to so cure or purchase any Mortgage Loan as to which a material defect in
or omission of a constituent document exists shall constitute the sole remedy
respecting such defect or omission available to Certificateholders or the
Trustee on behalf of Certificateholders. In addition, it is understood and
agreed that the Company has assigned to the Trustee all of its rights under the
Purchase Agreement and the right to enforce any remedy against the Seller as
provided in Section ______ of the Purchase Agreement. For purposes of
calculating the amount the Master Servicer is required to remit on the Master
Servicer Remittance Date following such repurchase or substitution, any Loan
Repurchase Price or Substitution Adjustment that is paid and deposited in the
related Collection Account as provided above shall be deemed to have been
deposited in the related Collection Account in the Due Period preceding such
Master Servicer Remittance Date.
(t) Upon receipt by the Trustee of a certification of a
Servicing Officer of such substitution or purchase and, in the case of a
substitution, upon receipt of the related Mortgage File, and the deposit of the
amounts described above in the Collection Account (which certification shall be
in the form of Exhibit H hereto), the Trustee shall release to the Master
Servicer for release to the Seller the related Mortgage File and shall execute,
without recourse, and deliver such instruments of transfer furnished by the
Seller as may be necessary to transfer such Mortgage Loan to the Seller. The
Trustee shall notify the Certificate Insurer if the Seller fails to repurchase
or substitute for a Mortgage Loan in accordance with the foregoing.
Section 2.05. Execution Of Certificates. The Trustee
acknowledges the assignment to it of the Mortgage Loans and the delivery of the
Mortgage Files relating thereto to it and, concurrently with such delivery, has
executed, authenticated and delivered to or upon the order of the Company, in
exchange for the Mortgage Loans, the Mortgage Files and the other assets
included in the definition of Trust Fund, Certificates duly authenticated by the
Trustee in Authorized Denominations evidencing the entire ownership of the Trust
Fund.
Section 2.06. Further Action Evidencing Assignments. (u) The
Company agrees that, from time to time, at the Seller's expense, the Company
shall cause the Seller promptly to execute and deliver all further instruments
and documents, and take all further action, that may be necessary or
appropriate, or that the Master Servicer or the Trustee may reasonably request,
in order to perfect, protect or more fully evidence the transfer of ownership of
the Trust Fund or to enable the Trustee to exercise or enforce any of its rights
hereunder. Without limiting the generality of the foregoing, the Company will,
upon the request of the Master Servicer or of the Trustee execute and file (or
cause to be executed and filed) such real estate filings, financing or
continuation statements, or amendments thereto or assignments thereof, and such
other instruments or notices, as may be necessary or appropriate.
38
44
(v) The Company hereby grants to the Master Servicer and the
Trustee powers of attorney to execute all documents on its behalf under this
Agreement and the Purchase Agreement as may be necessary or desirable to
effectuate the foregoing.
Section 2.07. Reserved.
Section 2.08. Conveyance Of The Subsequent Mortgage Loans.
(w) Subject to the conditions set forth in paragraph (b) below
in consideration of the Trustee's delivery on the related Subsequent Transfer
Dates to or upon the order of the Company of all or a portion of the balance of
funds in one of the Pre-Funding Accounts, the Company shall on any Subsequent
Transfer Date sell, transfer, assign, set over and convey without recourse to
the Trust Fund but subject to the other terms and provisions of this Agreement
all of the right, title and interest of the Company in and to (i) the Subsequent
Mortgage Loans identified on the Mortgage Loan Schedule attached to the related
Subsequent Transfer Instrument delivered by the Company on such Subsequent
Transfer Date, (ii) principal due and interest accruing on the Subsequent
Mortgage Loans after the related Subsequent Cut-off Date and (iii) all items
with respect to such Subsequent Mortgage Loans to be delivered pursuant to
Section 2.03 above and the other items in the related Mortgage Files; PROVIDED,
HOWEVER, that the Company reserves and retains all right, title and interest in
and to principal received and interest accruing on the Subsequent Mortgage Loans
prior to the related Subsequent Cut-off Date. The transfer to the Trustee for
Loan Group I or Loan Group II, as applicable, by the Company of the Subsequent
Mortgage Loans identified on the Mortgage Loan Schedule shall be absolute and is
intended by the Company, the Master Servicer, the Trustee and the
Certificateholders to constitute and to be treated as a sale of the Subsequent
Mortgage Loans by the Company to the Trust Fund for Loan Group I or Loan Group
II, as applicable. The related Mortgage File for each Subsequent Mortgage Loan
shall be delivered to the Trustee two Business Days prior to the Subsequent
Transfer Date.
The purchase price paid by the Trustee from amounts released
from the Pre-Funding Account shall be [one-hundred percent (100%)] of the
aggregate principal balances of the Subsequent Mortgage Loans so transferred (as
identified on the Mortgage Loan Schedule provided by the Company). This
Agreement shall constitute a fixed-price purchase contract in accordance with
Section 860G(a)(3)(A)(ii) of the Code.
(x) The Company shall transfer to the Trustee for Loan Group I
or Loan Group II the Subsequent Mortgage Loans and the other property and rights
related thereto described in Section 2.08 (a) above, and the Trustee shall
release funds from the related Pre-Funding Account, only upon the satisfaction
of each of the following conditions on or prior to the related Subsequent
Transfer Date:
(i) the Company shall have provided the Trustee and the
Certificate Insurer with a timely Addition Notice and shall have
provided any information reasonably requested by the Trustee or the
Certificate Insurer with respect to the Subsequent Mortgage Loans;
(ii) the Company shall have delivered to the Trustee a duly
executed Subsequent Transfer Instrument, which shall include a Mortgage
Loan Schedule, listing the Subsequent Mortgage Loans;
(iii) as of each Subsequent Transfer Date, as evidenced by
delivery of the Subsequent Transfer Instrument in the form of Exhibit
N, the Company shall not be insolvent nor shall it have been made
insolvent by such transfer nor shall it be aware of any pending
insolvency;
39
45
(iv) such sale and transfer shall not result in a material
adverse tax consequence to the Trust Fund or the Certificateholders;
(v) the Funding Period shall not have terminated;
(vi) the Company shall have delivered to the Trustee a
Subsequent Transfer Instrument substantially in the form of Exhibit N,
confirming the satisfaction of each condition precedent and
representations specified in this Section 2.08(b) and Section 2.08(c)
following and in the related Subsequent Transfer Instrument;
(vii) the Certificate Insurer shall have delivered to the
Trustee an Officer's Certificate confirming that the Subsequent
Mortgage Loans conform to the representations and warranties of Section
_______ of the Insurance Agreement; and
(viii) the Company shall have delivered to the Trustee and the
Certificate Insurer Opinions of Counsel addressed to the Certificate
Insurer, the Rating Agencies and the Trustee with respect to the
transfer of the Subsequent Mortgage Loans substantially in the form of
the Opinions of Counsel delivered to the Certificate Insurer and the
Trustee on the Closing Date regarding certain bankruptcy, corporate and
tax matters.
(y) The obligation of the Trust Fund to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the following
representations and warranties of the Company with respect to such Subsequent
Mortgage Loan being satisfied: (i) such Subsequent Mortgage Loan may not be 30
or more days contractually delinquent as of the related Subsequent Cut-off Date;
(ii) the stated term to maturity of such Subsequent Mortgage Loan will not
exceed 360 months; (iii) such Subsequent Mortgage Loan may not provide for
negative amortization; (iv) such Subsequent Mortgage Loan will be underwritten
in accordance with the Underwriting Guidelines; (v) such Subsequent Mortgage
Loan will not have a Loan-to Value Ratio (or Combined Loan-to-Value Ratio in the
case of second lien Mortgage Loans) greater than [100.00%]; (vi) such Subsequent
Mortgage Loans will have as of the end of the related Funding Period, a weighted
average term since origination not in excess of [six months]; and (vii) such
Subsequent Mortgage Loan, if in Loan Group II, will not have a Net Mortgage
Interest Rate less than _______%. In addition, following the purchase of any
Subsequent Mortgage Loans by the Trust Fund, the Group I and Group II Loans, as
determined separately (including the related Subsequent Mortgage Loans) as of
the end of the related Funding Period will (a) have a weighted average original
term to stated maturity of not more than 360 months; (b) have a weighted average
Loan-to-Value Ratio (or weighted average Combined Loan-to-Value Ratio in the
case of second lien Mortgage Loans) of not more than ______% with respect to the
Group I Loans, and ________% with respect to Group II Loans, each by aggregate
principal balance of the related Mortgage Loans; (c) have no Mortgage Loan with
a principal balance in excess of $____________; (d) have a weighted average
Gross Margin not less than _______% with respect to the Group I Loans; and (e)
not have a concentration of second lien Mortgage Loans in excess of _______%
with respect to Loan Group II, by aggregate principal balance of the related
Mortgage Loans. In the sole discretion of the Certificate Insurer, Subsequent
Mortgage Loans with characteristics varying from those set forth above may be
purchased by the Trust Fund (except that no Subsequent Mortgage Loan in Loan
Group II shall have a Net Mortgage Interest Rate less than _________%);
provided, however, that the addition of such Mortgage Loans will not materially
affect the aggregate characteristics of the Group I Loans or Group II Loans.
(z) Within five Business Days after the end of the Funding
Period, the Company shall deliver to [DCR, Xxxxx'x and S&P] a copy of the
updated Mortgage Loan Schedule including the Subsequent Mortgage Loans in
electronic format.
40
46
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations of the Master Servicer. The
Master Servicer hereby represents and warrants to the Trustee, the Company, the
Certificate Insurer and the Certificateholders as of the Closing Date:
(aa) The Master Servicer is a ___________ corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation and is in compliance with the laws of each
state in which any Mortgaged Property is located to the extent
necessary to enable it to perform its obligations under the terms of
this Agreement; the Master Servicer has the full corporate power and
authority to execute and deliver this Agreement and to perform in
accordance herewith; the execution, delivery and performance of this
Agreement by the Master Servicer and the consummation of the
transactions contemplated hereby have been duly and validly authorized;
this Agreement evidences the valid, binding and enforceable obligation
of the Master Servicer; and all requisite corporate action has been
taken by the Master Servicer to make this Agreement valid and binding
upon the Master Servicer in accordance with its terms;
(ab) Neither the execution and delivery of this Agreement, nor
the fulfillment of or compliance with the terms and conditions of this
Agreement, will conflict with or result in a breach of any of the
terms, conditions or provisions of the Master Servicer's charter or
by-laws or any legal restriction or any agreement or instrument to
which the Master Servicer is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the
foregoing, or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Master Servicer or its property
is subject, or impair the ability of the Trustee (or the Master
Servicer as the agent of the Trustee) to realize on the Mortgage Loans,
or impair the value of the Mortgage Loans;
(ac) The Master Servicer is an approved seller/servicer of
conventional residential mortgage loans for FNMA and FHLMC;
(ad) There is no action, suit, proceeding or investigation
pending or, to the knowledge of the Master Servicer, threatened against
the Master Servicer which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Master
Servicer, or in any material impairment of the right or ability of the
Master Servicer to carry on its business substantially as now
conducted, or of any action taken or to be taken in connection with the
obligations of the Master Servicer contemplated herein, or which would
materially impair the ability of the Master Servicer to perform under
the terms of this Agreement;
(ae) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Master Servicer of or compliance by the Master
Servicer with this Agreement or the Mortgage Loans or the consummation
of the transactions contemplated by this Agreement, or if required,
such approval has been obtained prior to the Closing Date; and
(af) Neither this Agreement nor any statement, report or other
document furnished by the Master Servicer pursuant to this Agreement or
in connection with the transactions
41
47
contemplated hereby contains any untrue statement of material fact
regarding the Master Servicer or omits to state a material fact
necessary to make the statements regarding the Master Servicer
contained herein or therein not misleading.
It is understood and agreed that the representations and warranties set forth in
this Section 3.01 shall survive the delivery of the respective Mortgage Files to
the Trustee or to a custodian, as the case may be, and inure to the benefit of
the Trustee, the Certificateholders and the Certificate Insurer.
Section 3.02. Representations, Warranties And Covenants Of The
Company. The Company hereby represents, warrants and covenants to the Trustee,
the Certificateholders and the Certificate Insurer that as of the date of this
Agreement or as of such date specifically provided herein:
(ag) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(ah) The Company has the corporate power and authority to
convey the Mortgage Loans and to execute, deliver and perform, and to
enter into and consummate transactions contemplated by, this Agreement;
(ai) This Agreement has been duly and validly authorized,
executed and delivered by the Company, all requisite corporate action
having been taken, and, assuming the due authorization, execution and
delivery hereof by the Master Servicer and the Trustee, constitutes or
will constitute the legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and by general equity
principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(aj) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority
or court is required for the execution, delivery and performance of or
compliance by the Company with this Agreement or the consummation by
the Company of any of the transactions contemplated hereby, except as
have been made on or prior to the Closing Date;
(ak) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this
Agreement, (i) conflicts or will conflict with or results or will
result in a breach of, or constitutes or will constitute a default or
results or will result in an acceleration under (a) the charter or
bylaws of the Company, or (B) of any term, condition or provision of
any material indenture, deed of trust, contract or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which it or any of its subsidiaries is bound; (ii) results or
will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Company of any court or
governmental authority having jurisdiction over the Company or its
subsidiaries; or (iii) results in the creation or imposition of any
lien, charge or encumbrance which would have a material adverse effect
upon the Mortgage Loans or any documents or instruments evidencing or
securing the Mortgage Loans;
(al) There are no actions, suits or proceedings before or
against or investigations of, the Company pending, or to the knowledge
of the Company, threatened, before any court, administrative agency or
other tribunal, and no notice of any such action, which, in the
42
48
Company's reasonable judgment, might materially and adversely affect
the performance by the Company of its obligations under this Agreement,
or the validity or enforceability of this Agreement; and
(am) The Company is not in default with respect to any order
or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency that would materially
and adversely affect its performance hereunder.
It is understood and agreed that the representations, warranties and covenants
set forth in this Section 3.02 shall survive delivery of the respective Mortgage
Files to the Trustee or to a custodian, as the case may be, and shall inure to
the benefit of the Trustee, the Certificateholders and the Certificate Insurer.
Section 3.03. Purchase And Substitution. (an) It is understood
and agreed that the representations and warranties set forth in Sections ______
and _______ of the Purchase Agreement shall survive delivery of the Certificates
to the Certificateholders. Pursuant to the Purchase Agreement, with respect to
any representation or warranty contained in Sections _______ and _______ of the
Purchase Agreement that is made to the best of the Seller's knowledge, if it is
discovered by the Master Servicer, any Subservicer, the Trustee, the Certificate
Insurer or any Certificateholder that the substance of such representation and
warranty was inaccurate as of the Closing Date and such inaccuracy materially
and adversely affects the value of the related Mortgage Loan, then
notwithstanding the Seller's lack of knowledge with respect to the inaccuracy at
the time the representation or warranty was made, such inaccuracy shall be
deemed a breach of the applicable representation or warranty. Upon discovery by
the Seller, the Master Servicer, any Subservicer, the Trustee or the Certificate
Insurer of a breach of any of such representations and warranties which
materially and adversely affects the value of the Mortgage Loans or the interest
of the Certificateholders or the Certificate Insurer, or which materially and
adversely affects the interests of the Certificate Insurer or the
Certificateholders in the related Mortgage Loan in the case of a representation
and warranty relating to a particular Mortgage Loan (notwithstanding that such
representation and warranty was made to the Seller's best knowledge), the party
discovering such breach shall give prompt written notice to the others. Subject
to the last paragraph of this Section 3.03, within 60 days of the earlier of its
discovery or its receipt of notice of any breach of a representation or
warranty, pursuant to the Purchase Agreement, the Seller shall be required to
(a) promptly cure such breach in all material respects, or (b) purchase such
Mortgage Loan on the next succeeding Master Servicer Remittance Date, in the
manner and at the price specified in Section 2.04(b), or (c) remove such
Mortgage Loan from the Trust Fund (in which case it shall become a Deleted
Mortgage Loan) and substitute one or more Qualified Substitute Mortgage Loans;
provided, that, such substitution is effected not later than the date which is
two years after the Startup Day or at such later date, if the Trustee and the
Certificate Insurer receive an Opinion of Counsel to the effect set forth below
in this Section . Pursuant to the Purchase Agreement, any such substitution
shall be accompanied by payment by the Seller of the Substitution Adjustment, if
any, to be deposited in the Collection Account.
(ao) As to any Deleted Mortgage Loan for which the Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, the Seller shall be
required pursuant to the Purchase Agreement to effect such substitution by
delivering to the Trustee a certification in the form attached hereto as Exhibit
H, executed by a Servicing Officer and the documents described in Sections
2.03(a)(i)-(vi) for such Qualified Substitute Mortgage Loan or Loans.
(ap) The Master Servicer shall deposit in the Collection
Account all payments received in connection with such Qualified Substitute
Mortgage Loan or Loans after the date of such substitution. Monthly Payments
received with respect to Qualified Substitute Mortgage Loans on or before the
date of substitution will be retained by the Seller. The Trust Fund will own all
payments received on the
43
49
Deleted Mortgage Loan on or before the date of substitution, and the Seller
shall thereafter be entitled to retain all amounts subsequently received in
respect of such Deleted Mortgage Loan. The Master Servicer shall give written
notice to the Trustee and the Certificate Insurer that such substitution has
taken place and shall amend the Mortgage Loan Schedule to reflect the removal of
such Deleted Mortgage Loan from the terms of this Agreement and the substitution
of the Qualified Substitute Mortgage Loan. Upon such substitution, such
Qualified Substitute Mortgage Loan or Loans shall be subject to the terms of
this Agreement in all respects.
(aq) It is understood and agreed that the obligations of the
Seller set forth in Sections ________ and ________ of the Purchase Agreement to
cure, purchase or substitute for a defective Mortgage Loan as provided in
Sections 2.05 and 3.04 constitute the sole remedies of the Trustee, the
Certificate Insurer and the Certificateholders respecting a breach of the
representations and warranties of the Seller set forth in Sections _______ and
_______ of the Purchase Agreement. In addition, it is understood and agreed that
the Company has assigned to the Trustee all of its rights under the Purchase
Agreement and the right to enforce any remedy against the Seller as provided in
Section ______ of the Purchase Agreement. The Trustee shall give prompt written
notice to the Certificate Insurer and the Rating Agencies of any repurchase or
substitution made pursuant to this Section 3.03 or Section 2.04(b).
(ar) Upon discovery by the Master Servicer, the Trustee, the
Certificate Insurer or any Certificateholder that any Mortgage Loan does not
constitute a Qualified Mortgage, the party discovering such fact shall promptly
(and in any event within five days of the discovery) give written notice thereof
to the other parties. In connection therewith, pursuant to the Purchase
Agreement, the Seller shall be required to repurchase or substitute a Qualified
Substitute Mortgage Loan for the affected Mortgage Loan within 90 days of the
earlier of such discovery by any of the foregoing parties, or the Trustee's or
the Seller's receipt of notice, in the same manner as it would a Mortgage Loan
for a breach of representation or warranty contained in Section ________ or
______ of the Purchase Agreement. The Trustee shall reconvey to the Seller the
Mortgage Loan to be released pursuant hereto in the same manner, and on the same
terms and conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Section _______ or _______ of the
Purchase Agreement.
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates. The Certificates shall be
substantially in the forms annexed hereto as Exhibits B-1 and B-2. The
Certificates shall be issued in Authorized Denominations only. All Certificates
shall be executed by manual or facsimile signature on behalf of the Trustee by
an authorized officer and authenticated by the manual or facsimile signature of
an authorized officer. Certificates bearing the signatures of individuals who
were at the time of the execution of the Certificates the authorized officers of
the Trustee shall bind the Trustee, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the delivery of such
Certificates or did not hold such offices at the date of such Certificates. All
Certificates issued hereunder shall be dated the date of their authentication.
Section 4.02. Registration Of Transfer And Exchange Of
Certificates. (as) The Trustee, as registrar, shall cause to be kept a register
(the "Certificate Register") in which, subject to such reasonable regulations as
it may prescribe, the Trustee shall provide for the registration of Certificates
and the registration of transfer of Certificates. The Trustee is hereby
appointed registrar for the purpose of registering Certificates and transfers of
Certificates as herein provided. The Certificate Insurer shall
44
50
be entitled to inspect and verify the Certificate Register and the records of
the Trustee relating to the Certificates during normal business hours upon
reasonable notice.
(at) All Certificates issued upon any registration of transfer
or exchange of Certificates shall be valid evidence of the same ownership
interests in the Trust Fund and entitled to the same benefits under this
Agreement as the Certificates surrendered upon such registration of transfer or
exchange.
(au) Every Certificate presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Trustee duly
executed by the Holder thereof or his attorney duly authorized in writing.
(av) No service charge shall be made to a Holder for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transfer or
exchange shall be an expense of the Trust Fund.
(aw) It is intended that the Class A Certificates be
registered so as to participate in a global book-entry system with the
Depository, as set forth herein. The Class A Certificates shall, except as
otherwise provided in the next paragraph, be initially issued in the form of a
single fully registered Class A Certificate with a denomination equal to the
Original Certificate Principal Balance. Upon initial issuance, the ownership of
each such Class A Certificate shall be registered in the Certificate Register in
the name of Cede & Co., or any successor thereto, as nominee for the Depository.
The Company and the Trustee are hereby authorized to execute and deliver the
Representation Letter with the Depository. With respect to Class A Certificates
registered in the Certificate Register in the name of Cede & Co., as nominee of
the Depository, the Company, each Seller, the Master Servicer, the Trustee and
the Certificate Insurer shall have no responsibility or obligation to Direct or
Indirect Participants or beneficial owners for which the Depository holds Class
A Certificates from time to time as a Depository. Without limiting the
immediately preceding sentence, the Company, each Seller, the Master Servicer,
the Trustee and the Certificate Insurer shall have no responsibility or
obligation with respect to (i) the accuracy of the records of the Depository,
Cede & Co., or any Direct or Indirect Participant with respect to any Ownership
Interest, (ii) the delivery to any Direct or Indirect Participant or any other
Person, other than a Certificateholder, of any notice with respect to the Class
A Certificates or (iii) the payment to any Direct or Indirect Participant or any
other Person, other than a Certificateholder, of any amount with respect to any
distribution of principal or interest on the Class A Certificates. No Person
other than a Certificateholder shall receive a certificate evidencing such Class
A Certificate. Upon delivery by the Depository to the Trustee of written notice
to the effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of interest by the mailing of checks or drafts to the Certificateholders
appearing as Certificateholders at the close of business on a Record Date, the
name "Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(ax) In the event that (i) the Depository or the Company
advises the Trustee in writing that the Depository is no longer willing or able
to discharge properly its responsibilities as nominee and depository with
respect to the Class A Certificates and the Company or the Depository is unable
to locate a qualified successor or (ii) the Company at its sole option elects to
terminate the book-entry system through the Depository, the Class A Certificates
shall no longer be restricted to being registered in the Certificate Register in
the name of Cede & Co. (or a successor nominee) as nominee of the Depository. At
that time, the Company may determine that the Class A Certificates shall be
registered in the name of and deposited with a successor depository operating a
global book-entry system, as may be acceptable
45
51
to the Company, or such depository's agent or designee but, if the Company does
not select such alternative global book-entry system, then the Class A
Certificates may be registered in whatever name or names Certificateholders
transferring Class A Certificates shall designate, in accordance with the
provisions hereof; provided, however, that any such reregistration shall be at
the expense of the Company.
(ay) Notwithstanding any other provision of this Agreement to
the contrary, so long as any Class A Certificate is registered in the name of
Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Class A Certificates as the case may be and all notices with
respect to such Class A Certificates as the case may be shall be made and given,
respectively, in the manner provided in the Representation Letter.
(az) Except as provided in Section 4.02(i), no transfer, sale,
pledge or other disposition of a Class S or Class R Certificate shall be made
unless such transfer, sale, pledge or other disposition is exempt from the
registration requirements of the Securities Act of 1933, as amended (the "Act"),
and any applicable state securities laws or is made in accordance with said Act
and laws. In the event that a transfer of a Class S or Class R Certificate is to
be made under this Section 4.02(h), (i) the Company may direct the Trustee to
require an Opinion of Counsel acceptable to and in form and substance
satisfactory to the Trustee and the Company that such transfer shall be made
pursuant to an exemption, describing the applicable exemption and the basis
therefor, from said Act and laws or is being made pursuant to said Act and laws,
which Opinion of Counsel shall not be an expense of the Trustee, the Company or
the Master Servicer, provided that such Opinion of Counsel will not be required
in connection with the initial transfer of any such Certificate by the Company
or any Affiliate thereof, to a non-affiliate of the Company and (ii) the Trustee
shall require the transferee to execute a representation letter, substantially
in the form of Exhibit O hereto, and the Trustee shall require the transferor to
execute a representation letter, substantially in the form of Exhibit P hereto,
each acceptable to and in form and substance satisfactory to the Company and the
Trustee certifying to the Company and the Trustee the facts surrounding such
transfer, which representation letters shall not be an expense of the Trustee,
the Company or the Master Servicer, provided that such representation letter
will not be required in connection with any transfer of any such Certificate by
the Company to an Affiliate of the Company. Any such Certificateholder desiring
to effect such transfer shall, and does hereby agree to, indemnify the Trustee,
the Company and the Master Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such applicable
federal and state laws.
(ba) Transfers of Class S or Class R Certificates may be made
in accordance with this Section 4.02(i) if the prospective transferee of a
Certificate provides the Trustee and the Company with an investment letter
substantially in the form of Exhibit Q attached hereto, which investment letter
shall not be an expense of the Trustee, the Company or the Master Servicer, and
which investment letter states that, among other things, such transferee is a
"qualified institutional buyer" as defined under Rule 144A. Such transfers shall
be deemed to have complied with the requirements of Section 4.02(h) hereof;
provided, however, that no Transfer of any of the Certificates may be made
pursuant to this Section 4.02(i) by the Company. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Company and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
applicable federal and state laws.
(bb) Each Person who has or who acquires any Ownership
Interest in a Class R Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably appointed the Company or its
designee as its attorney-in-fact to negotiate the terms of any mandatory sale
under clause (8) below and to execute
46
52
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in a Class R Certificate are expressly subject to the following
provisions:
(1) Each Person holding or acquiring any Ownership Interest in
a Class R Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(2) In connection with any proposed Transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall require delivery
to it, and shall not register the Transfer of any Class R Certificate
until its receipt of, an affidavit and agreement (a "Transfer Affidavit
and Agreement") attached hereto as Exhibit I from the proposed
Transferee, in form and substance satisfactory to the Trustee,
representing and warranting, among other things, that such Transferee
is a Permitted Transferee, that it is not acquiring its Ownership
Interest in the Class R Certificate that is the subject of the proposed
Transfer as a nominee, trustee or agent for any Person that is not a
Permitted Transferee, that for so long as it retains its Ownership
Interest in a Class R Certificate, it will endeavor to remain a
Permitted Transferee, and that it has reviewed the provisions of this
Section 4.02(j) and agrees to be bound by them.
(3) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (2) above, if the
Trustee has actual knowledge that the proposed Transferee is not a
Permitted Transferee, no Transfer of an Ownership Interest in a Class R
Certificate to such proposed Transferee shall be effected.
(4) Each Person holding or acquiring any Ownership Interest in
a Class R Certificate shall agree (x) to require a Transfer Affidavit
and Agreement from any other Person to whom such Person attempts to
transfer its Ownership Interest in a Class R Certificate and (y) not to
transfer its Ownership Interest unless it provides a Transferor
Certificate to the Trustee stating that, among other things, it has no
actual knowledge that such other Person is not a Permitted Transferee.
(5) Each Person holding or acquiring an Ownership Interest in
a Class R Certificate, by purchasing an Ownership Interest in such
Certificate, agrees to give the Trustee written notice that it is a
"pass-through interest holder" within the meaning of temporary Treasury
regulation Section 1.67-3T(a)(2)(i)(a) immediately upon acquiring an
Ownership Interest in a Class R Certificate, if it is, or is holding an
Ownership Interest in a Class R Certificate on behalf of, a
"pass-through interest holder".
(6) The Trustee will register the Transfer of any Class R
Certificate only if it shall have received the Transfer Affidavit and
Agreement and all of such other documents as shall have been reasonably
required by the Trustee as a condition to such registration. In
addition, no Transfer of a Class R Certificate shall be made unless the
Trustee shall have received a representation letter from the Transferee
of such Certificate to the effect that such Transferee is a United
States Person and is not a Disqualified Organization. Transfers of the
Class R Certificates to Non-United States Persons and Disqualified
Organizations are prohibited.
(7) Any attempted or purported transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section 4.02 shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee shall
become a Holder of a Class R Certificate in violation of the provisions
of this Section 4.02, then the last
47
53
preceding Permitted Transferee shall be restored to all rights as
Holder thereof retroactive to the date of registration of transfer of
such Class R Certificate. The Trustee shall notify the Company upon
receipt of written notice or discovery by a Responsible Officer that
the registration of transfer of a Class R Certificate was not in fact
permitted by this Section 4.02. Knowledge shall not be imputed to the
Trustee with respect to an impermissible transfer in the absence of
such a written notice or discovery by a Responsible Officer of the
Trustee. The Trustee shall be under no liability to any Person for any
registration of transfer of a Class R Certificate that is in fact not
permitted by this Section 4.02 or for making any payments due on such
Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long
as the transfer was registered after receipt of the related Transfer
Affidavit and Agreement. Transfer Certificate. The Trustee shall be
entitled, but not obligated to recover from any Holder of a Class R
Certificate that was in fact not a Permitted Transferee at the time it
became a Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on such Class R Certificate at
and after either such time. Any such payments so recovered by the
Trustee shall be paid and delivered by the Trustee to the last
preceding Holder of such Certificate that was a Permitted Transferee.
(8) If any purported transferee shall become a Holder of a
Class R Certificate in violation of the restrictions in this Section
4.02, then the Company or its designee shall have the right, without
notice to the Holder or any prior Holder of such Class R Certificate,
to sell such Class R Certificate to a purchaser selected by the Company
or its designee on such reasonable terms as the Company or its designee
may choose. Such purchaser may be the Company itself or any Affiliate
of the Company. The proceeds of such sale, net of commissions, expenses
and taxes due, if any, will be remitted by the Company to the last
preceding purported transferee of such Class R Certificate, except that
in the event that the Company determines that the Holder or any prior
Holder of such Class R Certificate may be liable for any amount due
under this Section 4.02 or any other provision of this Agreement, the
Company may withhold a corresponding amount from such remittance as
security for such claim. The terms and conditions of any sale under
this clause (8) shall be determined in the sole discretion of the
Company or its designee, and it shall not be liable to any Person
having an Ownership Interest in a Class R Certificate as a result of
its exercise of such discretion.
(bc) The Trustee shall make available to the Internal Revenue
Service and those Persons specified by the REMIC Provisions, all information
necessary to compute any tax imposed (i) as a result of the transfer of an
ownership interest in a Class R Certificate to any Person who is a Disqualified
Organization, including the information regarding "excess inclusions" of such
Class R Certificates required to be provided to the Internal Revenue Service and
certain Persons as described in Treasury Regulations Sections 1.860D-1(b)(5) and
1.860E- 2(a)(5), and (ii) as a result of any regulated investment company, real
estate investment trust, common trust fund, partnership, trust, estate or
organization described in Section 1381 of the Code that holds an Ownership
Interest in a Class R Certificate having as among its record holders at any time
any Person who is a Disqualified Organization. The Trustee may charge and shall
be entitled to reasonable compensation for providing such information as may be
required from those Persons which may have had a tax imposed upon them as
specified in clauses (i) and (ii) of this paragraph for providing such
information.
(bd) The provisions of Sections 4.02(j) and 4.02(k) may be
modified, added to or eliminated, provided that there shall have been delivered
to the Trustee and the Certificate Insurer an Opinion of Counsel to the effect
that such modification of, addition to or elimination of such provisions will
not cause the Trust Fund to cease to qualify as a REMIC and will not cause (x)
the Trust Fund to be subject to an entity-level tax caused by the Transfer of
any Ownership Interest in a Class R Certificate
48
54
to a Person that is not a Permitted Transferee or (y) a Person other than the
prospective transferee to be subject to a REMIC-related tax caused by the
Transfer of an Ownership Interest in a Class R Certificate to a Person that is
not a Permitted Transferee.
(be) No transfer of a Class A Certificate or any interest
therein shall be made to any Plan that is subject to ERISA or the Code (or
comparable provisions of any subsequent enactments), any Person acting, directly
or indirectly, on behalf of any such Plan or any Person acquiring such Class A
Certificates with until the balance of the applicable Pre-Funding Account is
reduced to zero. No transfer of a Subordinate Certificate or any interest
therein shall be made to any Plan that is subject to ERISA or the Code (or
comparable provisions of any subsequent enactments), any Person acting, directly
or indirectly, on behalf of any such Plan or any Person acquiring such Class S
or Class R Certificates with "plan assets" of a Plan within the meaning of the
Department of Labor regulation promulgated at 29 C.F.R. ss.2510.3-101 ("Plan
Assets") unless the prospective Transferee provides the Trustee and the Company
with a certification of facts and an Opinion of Counsel acceptable to and in
form and substance satisfactory to the Trustee and the Company to the effect
that the purchase of such Certificates is permissible under applicable law, will
not constitute or result in any prohibited transaction under ERISA or Section
4975 of the Code and will not subject the Trustee or the Company to any
obligation or liability (including obligations or liabilities under ERISA or
Section 4975 of the Code) in addition to those undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Trustee, the Company or
the Master Servicer. The Trustee and the Company shall require the prospective
Transferee of any Class S or Class R Certificate to certify in the form of
Exhibit O or Exhibit Q that it is neither (i) a Plan nor (ii) a Person who is
directly or indirectly purchasing a Certificate on behalf of, as named fiduciary
of, as trustee of, or with Plan Assets of, a Plan.
(bf) Subject to the restrictions set forth in this Agreement,
upon surrender for registration of transfer of any Certificate at the office or
agency of the Trustee located in [New York], [New York], the Trustee shall
execute, authenticate and deliver in the name of the designated transferee or
transferees, a new Certificate of the same Class and Percentage Interest and
dated the date of authentication by the Trustee. At the option of the
Certificateholders, Certificates may be exchanged for other Certificates of
Authorized Denominations of a like aggregate Percentage Interest, upon surrender
of the Certificates to be exchanged at such office. Whenever any Certificates
are so surrendered for exchange, the Trustee shall execute, authenticate and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. No service charge shall be made for any transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be cancelled by the Trustee.
Section 4.03. Mutilated, Destroyed, Lost Or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (b) there is delivered to the Trustee such
security or indemnity as may reasonably be required by each of them to save each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Percentage Interest, but bearing a number not contemporaneously
outstanding. Upon the issuance of any new Certificate under this Section 4.03,
the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and their fees
and expenses connected therewith. Any duplicate Certificate issued pursuant to
this Section 4.03 shall constitute complete and indefeasible evidence of
ownership in the Trust Fund, as if originally issued, whether or not the
mutilated, destroyed, lost or stolen Certificate shall be found at any time.
49
55
Section 4.04. Persons Deemed Owners. Prior to due presentation
of a Certificate for registration of transfer and subject to the provisions of
Section 4.02 and Article X, the Master Servicer, the Company, the Seller, the
Certificate Insurer and the Trustee may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving remittances pursuant to Section 6.05 and for all other purposes
whatsoever, and the Master Servicer, the Company, the Seller, the Certificate
Insurer and the Trustee shall not be affected by notice to the contrary.
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01. Appointment Of The Master Servicer.
(a) [_____________________________] agrees to act as the Master Servicer and to
perform all servicing duties under this Agreement subject to the terms hereof.
(b) The Master Servicer shall service and administer the
Mortgage Loans on behalf of the Trustee and shall have full power and authority,
acting alone or through one or more Subservicers, to do any and all things in
connection with such servicing and administration which it may deem necessary or
desirable. Without limiting the generality of the foregoing, the Master
Servicer, in its own name or the name of a Subservicer, may, and is hereby
authorized and empowered by the Trustee to, execute and deliver, on behalf of
itself, the Certificateholders and the Trustee or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Mortgage
Loans, the insurance policies and accounts related thereto and the properties
subject to the Mortgages. Upon the execution and delivery of this Agreement, and
from time to time as may be required thereafter, the Trustee shall, upon written
request, execute for the Master Servicer or its Subservicers any powers of
attorney and such other documents as may be necessary or appropriate to enable
the Master Servicer to carry out its servicing and administrative duties
hereunder.
In servicing and administering the Mortgage Loans, the Master
Servicer shall employ procedures consistent with Accepted Servicing Practices
and in a manner consistent with recovery under any insurance policy required to
be maintained by the Master Servicer pursuant to this Agreement.
The Master Servicer shall make Mortgage Interest Rate and
Monthly Payment adjustments on each Rate Adjustment Date in compliance with
applicable regulatory adjustable mortgage loan requirements and the Mortgage
Notes with respect to each Group I Loan. The Master Servicer shall establish
procedures to monitor the Rate Adjustment Dates and the Index in order to assure
that it uses the correct Index in determining an interest rate change, and it
will comply with those procedures. In the event the Index is no longer
available, the Master Servicer shall choose a new comparable Index in accordance
with the provisions hereof, of the applicable Mortgage Note and of Accepted
Servicing Practices, and shall provide the Mortgagor and the Trustee with notice
of the new Index sufficient under law and the Mortgage Loan Documents. The
Master Servicer shall execute and deliver all appropriate notices required by
the applicable adjustable mortgage loan laws and regulations and the Mortgage
Loan Documents regarding such Mortgage Interest Rate adjustments and payment
adjustments.
Each adjustment in the Mortgage Interest Rate shall result in
an adjustment to the related Monthly Payment. If the Master Servicer fails to
make a timely Mortgage Interest Rate or Monthly Payment adjustment, the Master
Servicer shall use its own funds to satisfy any shortage in the Mortgagor's
remittance so long as such shortage shall continue; any such amount paid by the
Master
50
56
Servicer shall be reimbursable to it from any subsequent amounts collected on
account of the related Mortgage Loan with respect to such adjustments.
Costs incurred by the Master Servicer in effectuating the
timely payment of taxes and assessments on the property securing a Mortgage Note
and foreclosure costs may be added by the Master Servicer to the amount owing
under such Mortgage Note where the terms of such Mortgage Note so permit;
PROVIDED, HOWEVER, that the addition of any such cost shall not be taken into
account for purposes of calculating the principal amount of the Mortgage Note
and Mortgage Loan, the Monthly Payments on the Mortgage Note and Mortgage Loan
or distributions to be made to Certificateholders. Such costs shall be
recoverable by the Master Servicer pursuant to Section 5.04.
(c) Subject to Section 5.12, the Master Servicer is hereby
authorized and empowered to execute and deliver on behalf of the Trustee and
each Certificateholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties. If
reasonably required by the Master Servicer, each Certificateholder and the
Trustee shall execute any powers of attorney furnished to the Trustee by the
Master Servicer and other documents necessary or appropriate to enable the
Master Servicer to carry out its servicing and administrative duties under this
Agreement.
(d) On and after such time as the Trustee receives the
resignation of, or notice of the removal of, the Master Servicer from its rights
and obligations under this Agreement, and with respect to resignation pursuant
to Section 5.24, after receipt by the Trustee and the Certificate Insurer of the
Opinion of Counsel required pursuant to Section 5.24, the Trustee or its
designee approved by the Certificate Insurer (which approval shall not be
unreasonably withheld) shall assume all of the rights and obligations of the
Master Servicer, subject to Section 7.02 hereof. The Master Servicer shall, upon
request of the Trustee but at the expense of the Master Servicer, deliver to the
Trustee all documents and records relating to the Mortgage Loans, any other
instruments or documents as the Trustee may reasonably request to effect the
efficient transfer of the duties of the Master Servicer and an accounting of
amounts collected and held by the Master Servicer and otherwise use its best
efforts to effect the orderly and efficient transfer of servicing rights and
obligations to the assuming party.
(e) If the Mortgage relating to a Mortgage Loan did not have a
lien senior on the related Mortgaged Property as of the Cut-Off Date, then the
Master Servicer, in such capacity, may not consent to the placing of a lien
senior to that of the Mortgage on the related Mortgaged Property. If the
Mortgage relating to a Mortgage Loan had a lien senior to the Mortgage Loan on
the related Mortgaged Property as of the Cut-Off Date, then the Master Servicer,
in such capacity, may consent to the refinancing of such senior lien; PROVIDED
that (i) the resulting Combined Loan-to-Value Ratio of such Mortgage Loan is no
higher than the Combined Loan-to Value Ratio prior to such refinancing and (ii)
the interest rate for the loan evidencing the refinanced senior lien on the date
of such refinancing is no higher than the interest rate on the loan evidencing
the existing senior lien immediately prior to the date of such refinancing.
(f) The Master Servicer shall deliver a list of Servicing
Officers to the Trustee and the Certificate Insurer by the Closing Date.
Section 5.02. Subservicing Agreements Between The Master
Servicer And Subservicers. (a) The Master Servicer may, subject to the prior
written approval of the Certificate Insurer, enter into Subservicing Agreements
with Subservicers for the servicing and administration of the Mortgage Loans and
for the performance of any and all other activities of the Master Servicer
hereunder. Each Subservicer shall be either (i) a depository institution the
accounts of which are insured by the FDIC or
51
57
(ii) another entity that engages in the business of originating, acquiring or
servicing loans, and in either case shall be authorized to transact business in
the state or states where the related Mortgaged Properties it is to service are
situated and in either case shall be a FNMA-approved mortgage servicer. In
addition, each Subservicer will obtain and preserve its qualifications to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform or cause to be performed its duties under the related
Subservicing Agreement. Each Subservicing Agreement shall provide that the
Subservicer's rights shall terminate at the option of the successor Master
Servicer and without any termination fee, expense, penalty or other cost upon
the termination, resignation or other removal of the Master Servicer under this
Agreement.
(b) Notwithstanding any Subservicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Master Servicer and a Subservicer or reference to actions taken through a
Subservicer or otherwise, the Master Servicer shall remain obligated and
primarily liable to the Trustee, Certificateholders and the Certificate Insurer
for the servicing and administering of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Master Servicer alone were servicing and
administering the Mortgage Loans. For purposes of this Agreement, the Master
Servicer shall be deemed to have received payments on Mortgage Loans when the
Subservicer has received such payments.
In the event the Master Servicer shall for any reason no
longer be the Master Servicer (including by reason of an Event of Default), the
Trustee or its designee may, at its option, either (i) assume all of the rights
and obligations of the Master Servicer under each Subservicing Agreement that
the Master Servicer may have entered into or (ii) notwithstanding anything to
the contrary contained in each such Subservicing Agreement, terminate the
related Subservicer without being required to pay any fee, expense, penalty or
other costs in connection therewith.
Section 5.03. Collection Of Certain Mortgage Loan Payments;
Collection Account. (a) The Master Servicer shall make reasonable efforts to
collect all payments called for under the terms and provisions of the Mortgage
Loans, and shall, to the extent such procedures shall be consistent with this
Agreement and any applicable primary mortgage insurance policy, follow such
collection procedures as shall constitute Accepted Servicing Practices.
Consistent with the foregoing, the Master Servicer may in its discretion (i)
waive any prepayment charge, assumption fee, late payment charge or other charge
in connection with a Mortgage Loan, and (ii) arrange a schedule, running for no
more than 180 days after the Due Date for payment of any installment on any
Mortgage Note, for the liquidation of delinquent items. Any provision of this
agreement to the contrary notwithstanding, the Master Servicer shall not agree
to the modification or waiver of any provision of a Mortgage Loan at a time when
such Mortgage Loan is not in default or such default is not reasonably
foreseeable, if such modification or waiver would be treated as a taxable
exchange under Section 1001 of the Code, unless such exchange would not be
considered a "prohibited transaction" under the REMIC Provisions.
The Master Servicer shall establish and maintain in the name
of the Trustee the Collection Account, in trust for the benefit of the
Certificateholders and the Certificate Insurer. The Collection Account shall be
established and maintained as an Eligible Account.
The Master Servicer shall deposit in the Collection Account
(i) any amounts representing Monthly Payments on the Mortgage Loans due or to be
applied as of a date after the Cut-off Date, with respect to the Initial
Mortgage Loans, or Subsequent Cut-off Date, with respect to the Subsequent
52
58
Mortgage Loans, (ii) any amounts representing Monthly Payments on the Initial
Mortgage Loans due or to be applied as of a date on or before the Cut-off Date
(except for any interest accrued prior to ______________________, 19____ and
except for any principal received by the Company prior to the Cut-off Date the
receipt of which is reflected on the Mortgage Loan Schedule) and (iii)
thereafter, on a daily basis within two Business Days of receipt (except as
otherwise permitted herein), the following payments and collections received or
made by it (other than any amounts in respect of principal of or interest on the
Mortgage Loans which, under clauses (i) and (ii) above, are not required to be
deposited in the Collection Account):
(i) all payments received after the Cut-off Date or Subsequent
Cut-off Date, as applicable on account of principal on the Mortgage
Loans and all Principal Prepayments in Full, Curtailments and all Net
REO Proceeds collected after the Cut-off Date or Subsequent Cut-off
Date, as applicable;
(ii) all payments received after the Cut-off Date or
Subsequent Cut-off Date, as applicable on account of interest on the
Mortgage Loans (other than payments of interest that accrued on each
Mortgage Loan up to and including the Cut-off Date or Subsequent
Cut-off Date, as applicable);
(iii) all Net Liquidation Proceeds;
(iv) all Insurance Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase of
any Mortgage Loan and the amount of any Substitution Adjustment
pursuant to Sections 2.04 and 3.03; and
(vii) any amount expressly required to be deposited in the
Collection Account in accordance with certain provisions of this
Agreement, including, without limitation Sections 2.04(b), 2.04(c),
3.03(a), 3.03(c), 5.06, 5.07 and 5.18 of this Agreement;
PROVIDED, HOWEVER, that the Master Servicer shall be entitled, at its election,
either (a) to withhold and to pay to itself the applicable Servicing Fee from
any payment on account of interest or other recovery (including Net REO
Proceeds) as received and prior to deposit of such payments in the Collection
Account or (b) to withdraw the applicable Servicing Fee from the Collection
Account after the entire payment or recovery has been deposited therein;
provided, further, that with respect to any payment of interest received by the
Master Servicer in respect of a Mortgage Loan (whether paid by the Mortgagor or
received as Liquidation Proceeds, Insurance Proceeds or otherwise) which is less
than the full amount of interest then due with respect to such Mortgage Loan,
only that portion of such payment that bears the same relationship to the total
amount of such payment of interest as the rate used to determine the Servicing
Fee bears to the Mortgage Interest Rate borne by such Mortgage Loan shall be
allocated to the Servicing Fee with respect to such Mortgage Loan. All other
amounts shall be deposited in the Collection Account not later than the second
Business Day following the day of receipt and posting by the Master Servicer.
The Master Servicer may invest the funds in the Collection
Account only in Permitted Investments. No Permitted Investment shall be sold or
disposed of at a gain prior to maturity unless the Master Servicer has obtained
an Opinion of Counsel (at the Master Servicer's expense) that such sale or
disposition will not cause the Trust Fund to be subject to the tax on income
from prohibited transactions
53
59
imposed by Section 860F(a)(1) of the Code, otherwise subject the Trust Fund to
tax or cause the Trust Fund to fail to qualify as a REMIC. All income (other
than any gain from a sale or disposition of the type referred to in the
preceding sentence) realized from any such Permitted Investment shall be for the
benefit of the Master Servicer as additional servicing compensation. The amount
of any losses incurred in respect of any such investments shall be deposited in
the Collection Account by the Master Servicer out of its own funds immediately
as realized.
The foregoing requirements for deposit in the Collection
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of those
described in the last paragraph of Section 5.14 and payments in the nature of
prepayment charges, late payment charges or assumption fees need not be
deposited by the Master Servicer in the Collection Account. If the Master
Servicer deposits in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding. All funds
deposited by the Master Servicer in the Collection Account shall be held in the
Collection Account for the account of the Trustee in trust for the
Certificateholders until disbursed in accordance with Section 6.01 or withdrawn
in accordance with Section 5.04.
(b) Prior to the time of their required deposit in the
Collection Account, all amounts required to be deposited therein may be
deposited in an account in the name of Master Servicer, provided that such
account is an Eligible Account. All such funds shall be held by the Master
Servicer in trust for the benefit of the Certificateholders and the Certificate
Insurer pursuant to the terms hereof.
(c) The Collection Account may, upon written notice by the
Trustee to the Certificate Insurer, be transferred to a different depository so
long as such transfer is to an Eligible Account.
Section 5.04. Permitted Withdrawals From The Collection
Account. The Master Servicer may, from time to time, make withdrawals from the
Collection Account for the following purposes, without duplication:
(a) to reimburse itself for any accrued unpaid Servicing Fees
and for unreimbursed Periodic Advances and Servicing Advances. The
Master Servicer's right to reimbursement for unpaid Servicing Fees and
unreimbursed Servicing Advances shall be limited to late collections on
the related Mortgage Loan, including Liquidation Proceeds, Released
Mortgaged Property Proceeds, Insurance Proceeds and such other amounts
as may be collected by the Master Servicer from the related Mortgagor
or otherwise relating to the Mortgage Loan in respect of which such
unreimbursed amounts are owed. The Master Servicer's right to
reimbursement for unreimbursed Periodic Advances shall be limited to
late collections of interest on any Mortgage Loan and to Liquidation
Proceeds and Insurance Proceeds on related Mortgage Loans;
(b) to reimburse itself for any Periodic Advances or Servicing
Advances determined in good faith to have become Nonrecoverable
Advances, such reimbursement to be made from any funds in the
Collection Account;
(c) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having
competent jurisdiction;
54
60
(d) to withdraw any funds deposited in the Collection Account
that were not required to be deposited therein;
(e) to pay itself Servicing Compensation pursuant to Section
5.14 hereof to the extent not retained or paid pursuant to Section
5.03, 5.04 or 5.14;
(f) to pay to the Seller with respect to each Mortgage Loan or
property acquired in respect thereof that has been repurchased or
replaced pursuant to Section 2.04 or 3.03 or to pay to itself with
respect to each Mortgage Loan or property acquired in respect thereof
that has been purchased pursuant to Section 8.01 all amounts received
thereon and not required to be distributed as of the date on which the
related repurchase or purchase price or Principal Balance, as the case
may be, was determined;
(g) to pay to the Seller with respect to each Mortgage Loan
the amount of interest accrued and unpaid on such Mortgage Loan on the
Cut-off Date (with respect to the Initial Mortgage Loans) or Subsequent
Cut-off Date (with respect to the Subsequent Mortgage Loans);
(h) to make deposits to the Certificate Accounts (which shall
include the Trustee Fee) in the amounts and in the manner provided for
herein;
(i) to pay itself any interest earned on or investment income
earned with respect to funds in the Collection Account;
(j) to reimburse itself or the Company pursuant to Section
11.01; and
(k) to clear and terminate the Collection Account upon the
termination of this Agreement.
The Master Servicer shall keep and maintain a separate
accounting for each Mortgage Loan for the purpose of accounting for withdrawals
from the Collection Account pursuant to subclause (a).
Section 5.05. Payment Of Taxes, Insurance And Other Charges.
With respect to each Mortgage Loan, the Master Servicer shall maintain accurate
records reflecting casualty insurance coverage.
With respect to each Mortgage Loan as to which the Master
Servicer maintains escrow accounts, the Master Servicer shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates
and other charges which are or may become a lien upon the Mortgaged Property and
the status of primary mortgage guaranty insurance premiums, if any, and casualty
insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in any escrow account which shall have been estimated
and accumulated by the Master Servicer in amounts sufficient for such purposes,
as allowed under the terms of the Mortgage. To the extent that a Mortgage does
not provide for escrow payments, the Master Servicer shall, if it has received
notice of a default or deficiency, monitor such payments to determine if they
are made by the Mortgagor.
Section 5.06. Maintenance Of Casualty Insurance. The Master
Servicer shall cause to be maintained for each Mortgage Loan a casualty
insurance policy with extended coverage issued by a
55
61
generally acceptable insurer in an amount which is not less than the full
insurable value of the Mortgaged Property securing such Mortgage Loan or the
unpaid principal balance of such Mortgage Loan, whichever is less; provided,
however, that such insurance may not be less than the minimum amount required to
fully compensate for any loss or damage on a replacement cost basis. If, upon
origination of the Mortgage Loan, the improvements on the Mortgaged Property
were in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards (and such flood insurance has
been made available) the Master Servicer will cause to be maintained any
existing flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally acceptable
insurance carrier, in an amount representing coverage not less than the lesser
of (i) the unpaid principal balance of the Mortgage Loan and (ii) the maximum
amount of insurance which was available under the Flood Disaster Protection Act
of 1973. The Master Servicer shall also maintain similar fire insurance coverage
and, if applicable, flood insurance on property acquired upon foreclosure, or by
deed in lieu of foreclosure, of any Mortgage Loan in an amount which is at least
equal to the lesser of (i) the full insurable value of the improvements which
are a part of such property and (ii) the principal balance owing on such
Mortgage Loan at the time of such foreclosure or grant of deed in lieu of
foreclosure; provided, however, that such insurance may not be less than the
minimum amount required to fully compensate for any loss or damage on a
replacement cost basis. It is understood and agreed that such insurance shall be
with insurers approved by the Master Servicer and that no earthquake or other
additional insurance is to be required of any Mortgagor, other than pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. Pursuant to Section 5.03, any amounts
collected by the Master Servicer under any insurance policies maintained
pursuant to this Section 5.06 (other than amounts to be applied to the
restoration or repair of the related Mortgaged Property or released to the
Mortgagor in accordance with Accepted Servicing Practices) shall be deposited
into the Collection Account, subject to withdrawal pursuant to Section 5.04. Any
cost incurred by the Master Servicer in maintaining any such insurance shall be
added to the amount owing under the Mortgage Loan where the terms of the
Mortgage Loan so permit; provided, however, that the addition of any such cost
shall not be taken into account for purposes of calculating the principal amount
of the Mortgage Note or Mortgage Loan, the Monthly Payments on the Mortgage Note
or the distributions to be made to the Certificateholders. Such costs shall be
recoverable by the Master Servicer pursuant to Section 5.04. In the event that
the Master Servicer shall obtain and maintain a blanket policy issued by an
insurer that is acceptable to FNMA or FHLMC, insuring against hazard losses on
all of the Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligation as set forth in the first sentence of this Section 5.06, it being
understood and agreed that such policy may contain a deductible clause, in which
case the Master Servicer shall, in the event that there shall not have been
maintained on the related mortgaged or acquired property an insurance policy
complying with the first sentence of this Section 5.06 and there shall have been
a loss which would have been covered by such a policy had it been maintained, be
required to deposit from its own funds into the Collection Account the amount
not otherwise payable under the blanket policy because of such deductible
clause.
Section 5.07. Maintenance Of Mortgage Impairment Insurance
Policy. In the event that the Master Servicer shall obtain and maintain a
blanket policy (the "Mortgage Impairment Insurance Policy") with an insurer
either (i) having a General Policy rating of _______ or better in Best's Key
Rating Guide or (ii) approved in writing by the Certificate Insurer, such
approval not to be unreasonably withheld, insuring against fire and hazards of
extended coverage on all of the Mortgage Loans, then, to the extent such policy
names the Master Servicer as loss payee and provides coverage in an amount equal
to the aggregate unpaid principal balance on the Mortgage Loans without
co-insurance, and otherwise complies with the requirements of Section 5.06, the
Master Servicer shall be deemed conclusively to have satisfied its obligations
with respect to fire and hazard insurance coverage under Section 5.06, it being
understood and agreed that such blanket policy may contain a deductible clause,
in which case the Master Servicer shall, in the event that there shall not have
been maintained on the related Mortgaged Property
56
62
a policy complying with Section 5.06, and there shall have been a loss which
would have been covered by such policy, deposit in the Collection Account the
difference, if any, between the amount that would have been payable under a
policy complying with Section 5.06 and the amount paid under such blanket
policy. Upon the written request of the Certificate Insurer, the Trustee or any
Certificateholder, the Master Servicer shall cause to be delivered to the
Certificate Insurer, the Trustee or such Certificateholder, as the case may be,
a certified true copy of such policy. The Master Servicer agrees to prepare and
present, on behalf of itself, the Trustee, the Certificate Insurer and
Certificateholders, claims under any such policy in a timely fashion in
accordance with the terms of such policy.
Section 5.08. Fidelity Bond; Errors And Omissions Policy. (a)
The Master Servicer shall maintain with a responsible company, and at its own
expense, a blanket fidelity bond (a "Fidelity Bond") and an errors and omissions
insurance policy (an "Errors and Omissions Policy"), in a minimum amount
acceptable to FNMA or FHLMC [or, if __________ is the Master Servicer or if the
Trustee is the successor Master Servicer, in an amount generally maintained by
prudent mortgage loan servicers having servicing portfolios of a similar size].
(b) The Master Servicer shall be deemed to have complied with
this provision if one of its respective Affiliates has such a Fidelity Bond and
Errors and Omissions Policy and, by the terms of such fidelity bond and errors
and omission policy, the coverage afforded thereunder extends to the Master
Servicer. The Master Servicer shall cause each and every Subservicer for it to
maintain a policy of insurance covering errors and omissions and a fidelity bond
which would meet the requirements of Section 5.08(a). [If ______________ is not
the Master Servicer and the Trustee is not the successor Master Servicer, any
such Fidelity Bond and Errors and Omissions Policy shall not be cancelled or
modified in a materially adverse manner without 10 days prior written notice to
the Certificate Insurer].
Section 5.09. Collection Of Taxes, Assessments And Other
Items; Servicing Account. In addition to the Collection Account, the Master
Servicer shall establish and maintain a Servicing Account, which shall be an
Eligible Account, and shall deposit therein all payments by Mortgagors for
taxes, assessments, primary mortgage or hazard insurance premiums or comparable
items. Withdrawals from the Servicing Account may be made to effect payment of
taxes, assessments, primary mortgage or hazard insurance premiums or comparable
items, to reimburse the Master Servicer out of related collections for any
advances made in the nature of any of the foregoing, to refund to any Mortgagors
any sums determined to be overages, or to pay any interest owed to Mortgagors on
such account to the extent required by law or to clear and terminate the
Servicing Account at the termination of this Agreement upon the termination of
the Trust Fund. The Master Servicer shall advance the payments referred to in
the first sentence of this Section 5.09 that are not timely paid by the
Mortgagors on the date when the tax, premium or other cost for which such
payment is intended is due, but the Master Servicer shall be required to so
advance only to the extent that such advances, in the good faith judgment of the
Master Servicer, will be recoverable by the Master Servicer pursuant to Section
5.04 out of Liquidation Proceeds, Insurance Proceeds or otherwise.
Section 5.10. Periodic Filings With The Securities And
Exchange Commission; Additional Information. The Trustee shall prepare or cause
to be prepared for filing with the Commission (other than the Current Report on
Form 8-K to be filed by the Company in connection with computational materials
and the initial Current Report on Form 8-K to be filed by the Company in
connection with the issuance of the Certificates) any and all reports,
statements and information respecting the Trust Fund and/or the Certificates
required to be filed with the Commission pursuant to the Securities Exchange Act
of 1934, as amended, and shall solicit any and all proxies of the
Certificateholders whenever such proxies are required to be solicited, pursuant
to the Securities Exchange Act of 1934, as amended. The Company shall promptly
file, and exercise its reasonable best efforts to obtain a favorable response
to, no-action
57
63
requests with, or other appropriate exemptive relief from, the Commission
seeking the usual and customary exemption from such reporting requirements
granted to issuers of securities similar to the Certificates. Fees and expenses
incurred by the Trustee in connection with this Section shall not be
reimbursable from the Trust Fund.
The Master Servicer and the Company each agree to promptly
furnish to the Trustee, from time to time upon request, such further
information, reports and financial statements within their respective control
related to this Agreement and the Mortgage Loans as the Trustee reasonably deems
appropriate to prepare and file all necessary reports with the Commission.
Section 5.11. Enforcement Of Due-On-Sale Clauses; Assumption
Agreements. In any case in which a Mortgaged Property is about to be conveyed by
the Mortgagor (whether by absolute conveyance or by contract of sale, and
whether or not the Mortgagor remains liable thereon) and the Master Servicer has
knowledge of such prospective conveyance, the Master Servicer shall effect
assumptions in accordance with the terms of any due-on-sale provision contained
in the related Mortgage Note or Mortgage. The Master Servicer shall enforce any
due-on-sale provision contained in such Mortgage Note or Mortgage to the extent
the requirements thereunder for an assumption of the Mortgage Loan have not been
satisfied to the extent permitted under the terms of the related Mortgage Note,
unless such provision is not exercisable under applicable law and governmental
regulations or in the Master Servicer's judgment, such exercise is reasonably
likely to result in legal action by the Mortgagor, or such conveyance is in
connection with a permitted assumption of the related Mortgage Loan. Subject to
the foregoing, the Master Servicer is authorized to take or enter into an
assumption agreement from or with the Person to whom such property is about to
be conveyed, pursuant to which such person becomes liable under the related
Mortgage Note and, unless prohibited by applicable state law, the Mortgagor
remains liable thereon, provided that the Mortgage Interest Rate with respect to
such Mortgage Loan shall remain unchanged. The Master Servicer is also
authorized, to release the original Mortgagor from liability upon the Mortgage
Loan and substitute the new Mortgagor as obligor thereon. In connection with
such assumption or substitution, the Master Servicer shall apply such
underwriting standards and follow such practices and procedures as shall be
normal and usual for mortgage loans similar to the Mortgage Loans and as it
applies to mortgage loans owned solely by it. The Master Servicer shall notify
the Trustee that any such assumption or substitution agreement has been
completed by forwarding to the Trustee the original copy of such assumption or
substitution agreement, which copy shall be added by the Trustee to the related
Mortgage File and shall, for all purposes, be considered a part of such Mortgage
File to the same extent as all other documents and instruments constituting a
part thereof. In connection with any such assumption or substitution agreement,
the Mortgage Interest Rate of the related Mortgage Note and the payment terms
shall not be changed. Any fee collected by the Master Servicer for entering into
an assumption or substitution of liability agreement will be retained by the
Master Servicer as servicing compensation.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Master Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
conveyance by the Mortgagor of the property subject to the Mortgage or any
assumption of a Mortgage Loan by operation of law which the Master Servicer in
good faith determines it may be restricted by law from preventing, for any
reason whatsoever, or if the exercise of such right would impair or threaten to
impair any recovery under any applicable insurance policy or, in the Master
Servicer's judgment, be reasonably likely to result in legal action by the
Mortgagor.
Section 5.12. Realization Upon Defaulted Mortgage Loans. (a)
Except as provided in the last two paragraphs of this Section 5.12(a), the
Master Servicer shall foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Mortgage Loans as come into and
58
64
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 5.03. In connection with
such foreclosure or other conversion, the Master Servicer shall follow Accepted
Servicing Practices. The foregoing is subject to the proviso that the Master
Servicer shall not be required to expend its own funds in connection with any
foreclosure or to restore any damaged property unless it shall determine that
(i) such foreclosure and/or restoration will increase the proceeds of
liquidation of the Mortgage Loan to Certificateholders after reimbursement to
itself for such expenses and (ii) such expenses will be recoverable to it
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawal from the Collection Account pursuant to Section 5.04) or
otherwise. The Master Servicer shall be entitled to reimbursement of the
Servicing Fee and other amounts due it, if any, to the extent, but only to the
extent, that withdrawals from the Collection Account with respect thereto are
permitted under Section 5.04.
The Master Servicer may foreclose against the Mortgaged
Property securing a defaulted Mortgage Loan either by foreclosure, by sale or by
strict foreclosure, and in the event a deficiency judgment is available against
the Mortgagor or any other person, may proceed for the deficiency.
In the event that title to any Mortgaged Property is acquired
in foreclosure or by deed in lieu of foreclosure (an "REO Property"), the deed
or certificate of sale shall be issued to the Master Servicer on behalf of the
Trustee in the name of the Trustee, as trustee on behalf of the
Certificateholders. Notwithstanding any such acquisition of title and
cancellation of the related Mortgage Loan, such Mortgage Loan shall be
considered to be a Mortgage Loan held in the Trust Fund until such time as the
related Mortgaged Property shall be sold and such Mortgage Loan becomes a
Liquidated Mortgage Loan. Consistent with the foregoing, for purposes of all
calculations hereunder, so long as such Mortgage Loan shall be considered to be
an Outstanding Mortgage Loan:
(viii) It shall be assumed that, notwithstanding that the
indebtedness evidenced by the related Mortgage Note shall have been
discharged, such Mortgage Note and the related amortization schedule in
effect at the time of any such acquisition of title (after giving
effect to any previous Curtailments and before any adjustment thereto
by reason of any bankruptcy or similar proceeding or any moratorium or
similar waiver or grace period) remain in effect, except that such
schedule shall be adjusted to reflect the application of Net REO
Proceeds received in any month pursuant to the succeeding clause.
(ix) Net REO Proceeds received in any month shall be deemed to
have been received first in payment of the accrued interest that
remained unpaid on the date that such Mortgage Loan became an REO
Mortgage Loan, with the excess thereof, if any, being deemed to have
been received in respect of the delinquent principal installments that
remained unpaid on such date. Thereafter, Net REO Proceeds received in
any month shall be applied to the payment of installments of principal
and accrued interest on such Mortgage Loan deemed to be due and payable
in accordance with the terms of such Mortgage Note and such
amortization schedule. If such Net REO Proceeds exceed the then Unpaid
REO Amortization, the excess shall be treated as a Curtailment received
in respect of such Mortgage Loan.
(x) Only that portion of Net REO Proceeds allocable to
interest that bears the same relationship to the total amount of Net
REO Proceeds allocable to interest as the rate of the Servicing Fee
bears to the Mortgage Interest Rate borne by such Mortgage Loan shall
be allocated to the Servicing Fee with respect thereto.
In the event that the Trust Fund acquires any Mortgaged
Property as aforesaid or otherwise in connection with a default or reasonably
foreseeable default on a Mortgage Loan, such
59
65
Mortgaged Property shall be disposed of by or on behalf of the Trust Fund within
two years after its acquisition by the Trust Fund unless (a) the Master Servicer
shall have provided to the Trustee an Opinion of Counsel (at the expense of the
Trust Fund) to the effect that the holding by the Trust Fund of such Mortgaged
Property subsequent to two years after its acquisition (and specifying the
period beyond such two-year period for which the Mortgaged Property may be held)
will not cause the Trust Fund to be subject to the tax on prohibited
transactions imposed by Section 860F(a)(1) of the Code, otherwise subject the
Trust Fund to tax or cause the Trust Fund to fail to qualify as a REMIC at any
time that any Certificates are outstanding, or (b) the Master Servicer (at the
Trust Fund's expense) shall have applied for, at least 60 days prior to the
expiration of such two-year period, an extension of such two-year period in the
manner contemplated by Section 856(e)(3) of the Code, in which case the two-year
period shall be extended by the applicable period. The Master Servicer shall
further ensure that the Mortgaged Property is administered so that it
constitutes "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code at all times, that the sale of such property does not result in the
receipt by the Trust Fund of any income from non-permitted assets as described
in Section 860F(a)(2)(B) of the Code, and that the Trust Fund does not derive
any "net income from foreclosure property" within the meaning of Section
860G(c)(2) of the Code with respect to such property.
Any REO Disposition shall be for cash only (unless changes in
the REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration).
In lieu of foreclosing upon any defaulted Mortgage Loan, the
Master Servicer may, in its discretion, permit the assumption of such Mortgage
Loan if, in the Master Servicer's judgment, such default is unlikely to be cured
and if the assuming borrower satisfies the Master Servicer's underwriting
guidelines with respect to mortgage loans owned by the Master Servicer. In
connection with any such assumption, the Mortgage Interest Rate of the related
Mortgage Note and the payment terms shall not be changed. Any fee collected by
the Master Servicer for entering into an assumption agreement will be retained
by the Master Servicer as servicing compensation. Alternatively, the Master
Servicer may encourage the refinancing of any defaulted Mortgage Loan by the
Mortgagor.
Notwithstanding the foregoing, prior to instituting
foreclosure proceedings or accepting a deed-in-lieu of foreclosure with respect
to any Mortgaged Property, the Master Servicer shall make, or cause to be made,
inspection of the Mortgaged Property in accordance with the Accepted Servicing
Practices and, with respect to environmental hazards, such procedures are as
required by the provisions of the Federal National Mortgage Association's
selling and servicing guide applicable to single-family homes and in effect on
the date hereof. The Master Servicer shall be entitled to rely upon the results
of any such inspection made by others. In cases where the inspection reveals
that such Mortgaged Property is potentially contaminated with or affected by
hazardous wastes or hazardous substances, the Master Servicer shall promptly
give written notice of such fact to the Certificate Insurer, the Trustee and
each Class A Certificateholder. The Master Servicer shall not commence
foreclosure proceedings or accept a deed-in-lieu of foreclosure for Mortgaged
Property with respect to this paragraph without obtaining the written consent of
the Certificate Insurer.
(b) Promptly after the Closing Date, the Master Servicer
shall, with respect to each Mortgage Loan for which the Mortgage provides a
second lien on the related Mortgaged Property, cause to be recorded in the
appropriate public office for real property records, where permitted by
applicable law and where applicable law does not require that a second mortgagee
be named as a party defendant in foreclosure or comparable proceedings in order
to foreclose or otherwise preempt such mortgagee's equity of redemption, a
request for notice of any action by or on behalf of any mortgagee under a Senior
Mortgage Loan. The Master Servicer also shall promptly provide written notice to
each mortgagee under a Senior Mortgage Loan of the existence of the related
Mortgage Loan and request notification of any
60
66
action taken or to be taken against the related Mortgagor or Mortgaged Property
by or on behalf of such mortgagee in respect of such Senior Mortgage Loan.
(c) Upon becoming aware that a Senior Mortgage Loan has come
into default or of any action that the related mortgagee has taken or may take
in respect thereof, the Master Servicer shall, consistent with the REMIC
Provisions, take such actions as it shall deem necessary or advisable, as shall
be normal and usual in its general mortgage servicing activities and as shall be
required or permitted by Accepted Servicing Practices. In taking such actions,
the Master Servicer may advance such funds as are necessary to cure such
default, maintain such Senior Mortgage Loan, acquire the related mortgagee's
interest therein or redeem the related Mortgaged Property. The Master Servicer,
however, shall not be required to expend its own funds in connection therewith
unless it shall determine that such expense will be recoverable to it. All such
expenses shall be included as Liquidation Expenses pursuant to the definition
thereof, and shall be reimbursable from the related Liquidation Proceeds in
accordance with Section 5.04.
Section 5.13. Trustee To Cooperate; Release Of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the Master
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Master Servicer shall immediately notify the
Trustee in the form of a Request for Release in the form attached hereto as
Exhibit H (which request shall include a statement to the effect that all
amounts received in connection with such payment which are required to be
deposited in the Collection Account pursuant to Section 5.03 have been or shall
be so deposited) of a Servicing Officer and shall request delivery to it of the
Mortgage File. Upon receipt of such Request for Release, the Trustee, or the
Custodian on its behalf, shall promptly release the related Mortgage File to the
Master Servicer. Upon any such payment in full, the Master Servicer is
authorized to give, as agent for the Trustee and the mortgagee under the
Mortgage which secured the Mortgage Loan, an instrument of satisfaction (or
assignment of mortgage without recourse) regarding the property subject to such
Mortgage, which instrument of satisfaction or assignment, as the case may be,
shall be delivered to the Person or Persons entitled thereto against receipt
therefor of such payment, it being understood and agreed that no expenses
incurred in connection with such instrument of satisfaction or assignment, as
the case may be, shall be chargeable to the Collection Account. In connection
therewith, the Trustee shall execute and return to the Master Servicer any
required power of attorney provided to the Trustee by the Master Servicer and
other required documentation in accordance with Section 5.01(c). From time to
time and as appropriate for the servicing or foreclosure of any Mortgage Loan
and in accordance with Accepted Servicing Practices, the Trustee shall, upon
request of the Master Servicer and delivery to the Trustee of a Request for
Release signed by a Servicing Officer, release, or cause the Custodian to
release, the related Mortgage File to the Master Servicer and shall execute such
documents as shall be necessary to the prosecution of any such proceedings. Such
Request for Release shall obligate the Master Servicer to return the Mortgage
File to the Trustee when the need therefor by the Master Servicer no longer
exists unless the Mortgage Loan shall be liquidated, in which case, upon receipt
of a certificate of a Servicing Officer similar to the Request for Release
hereinabove specified, the Mortgage File shall be delivered by the Trustee to
the Master Servicer.
Each Request for Release may be delivered to the Trustee (i)
via mail or courier, (ii) via facsimile or (iii) by such other means, including,
without limitation, electronic or computer readable medium, as the Master
Servicer and the Trustee shall mutually agree. The Trustee shall promptly
release the related Mortgage File(s) within five (5) to seven (7) Business Days
of receipt of a properly completed Request for Release pursuant to clauses (i),
(ii) or (iii) above shall be authorization to the Trustee to release such
Mortgage Files, provided the Trustee has determined that such Request for
Release has been executed, with respect to clauses (i) or (ii) above, or
approved, with respect to clause (iii) above, by an authorized Servicing Officer
of the Master Servicer, and so long as the Trustee complies with its duties
61
67
and obligations under this Agreement. If the Trustee is unable to release the
Mortgage Files within the time frames previously specified, the Trustee shall
immediately notify the Master Servicer indicating the reason for such delay, but
in no event shall such notification be later than five Business Days after
receipt of a Request for Release. If the Master Servicer is required to pay
penalties or damages due to the Trustee's negligent failure to release the
related Mortgage File or the Trustee's negligent failure to execute and release
documents in a timely manner, the Trustee shall be liable for such penalties or
damages.
On each day that the Master Servicer remits to the Trustee
Requests for Releases pursuant to clauses (ii) or (iii) above, the Master
Servicer shall also submit to the Trustee a summary of the total amount of such
Requests for Releases requested on such day by the same method as described in
such clauses (ii) and (iii) above.
Section 5.14. Servicing Fee; Servicing Compensation. The
Master Servicer shall be entitled, at its election, either (a) to pay itself the
Servicing Fee out of any Mortgagor payment on account of interest or Net REO
Proceeds prior to the deposit of such payment in the Collection Account or (b)
to withdraw from the Collection Account such Servicing Fee pursuant to Section
5.04. The Master Servicer shall also be entitled, at its election, either (a) to
pay itself the Servicing Fee in respect of each delinquent Mortgage Loan out of
Liquidation Proceeds in respect of such Mortgage Loan or other recoveries with
respect thereto to the extent permitted in Section 5.03(a) to withdraw from the
Collection Account the Servicing Fee in respect of each such Mortgage Loan to
the extent of such Liquidation Proceeds or other recoveries, to the extent
permitted by Section 5.04.
Servicing compensation in the form of Net Foreclosure Profits,
prepayment penalties, assumption fees, late payment charges, tax service fees,
fees for statement of account or payoff of the Mortgage Loan (to the extent
permitted by applicable law) or otherwise shall be retained by the Master
Servicer and are not required to be deposited in the Collection Account. The
aggregate Servicing Fee is reserved for the administration of the Trust Fund
and, in the event of replacement of the Master Servicer as servicer of the
Mortgage Loans, for the payment of other expenses related to such replacement.
The aggregate Servicing Fee shall be offset as provided in Section 5.20. The
Master Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder (including maintenance of the
hazard insurance required by Section 5.05) and shall not be entitled to
reimbursement therefor except as specifically provided herein.
Section 5.15. Reports To The Trustee And The Company;
Collection Account Statements. Not later than 15 days after each Distribution
Date, the Master Servicer shall provide to the Trustee and the Company a
statement, certified by a Servicing Officer, setting forth the status of the
Collection Account as of the close of business on the last day of the
immediately preceding calendar month, stating that all distributions required by
this Agreement to be made by the Master Servicer on behalf of the Trustee have
been made (or if any required distribution has not been made by the Master
Servicer, specifying the nature and status thereof) and showing, for the period
covered by such statement, the aggregate of deposits into and withdrawals from
the Collection Account for each category of deposit specified in Section 5.03
and each category of withdrawal specified in Section 5.04 and the aggregate of
deposits into the Certificate Accounts as specified in Section 6.01(c). Such
statement shall also state the aggregate unpaid principal balance of all the
Mortgage Loans as of the close of business on the last day of the month
preceding the month in which such Distribution Date occurs. Copies of such
statement shall be provided by the Trustee to any Certificateholder upon
request.
Section 5.16. Annual Statement As To Compliance. The Master
Servicer will deliver to the Trustee, the Certificate Insurer and the Rating
Agencies on or before ____________ of each year,
62
68
beginning with _____________________, 199____, an Officers' Certificate stating
as to each signer thereof, that (i) a review of the activities of the Master
Servicer during the preceding calendar year and of its performance under this
Agreement has been made under such officer's supervision, and (ii) to the best
of such officer's knowledge, based on such review, the Master Servicer has
fulfilled all 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. Such
Officers' Certificate shall be accompanied by the statement described in Section
5.17 of this Agreement. Copies of such statement shall, upon request, be
provided to any Certificateholder by the Master Servicer, or by the Trustee at
the Master Servicer's expense if the Master Servicer shall fail to provide such
copies.
Section 5.17. Annual Independent Public Accountants' Servicing
Report. On or before ______________ of every year, beginning with
___________________, 199____, the Master Servicer, at its expense, shall cause a
firm of nationally recognized independent public accountants to furnish a
statement to the Trustee, the Certificate Insurer and the Rating Agencies to the
effect that, on the basis of an examination of certain documents and records
relating to the servicing of the mortgage loans being serviced by the Master
Servicer under pooling and servicing agreements similar to this Agreement,
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers, such firm is of the opinion that such servicing
has been conducted in compliance with this Agreement. Copies of such statement
shall, upon written request, be provided to Certificateholders by the Master
Servicer, or by the Trustee at the Master Servicer's expense if the Master
Servicer shall fail to provide such copies. For purposes of such statement, such
firm may conclusively presume that any pooling and servicing agreement which
governs mortgage pass-through certificates offered by the Company (or any
predecessor or successor thereto) in a registration statement under the
Securities Act of 1933, as amended, is similar to this Agreement, unless such
other pooling and servicing agreement expressly states otherwise.
Section 5.18. Optional Purchase Of Defaulted Mortgage Loans.
Any Affiliate of the Seller, in its sole discretion, shall have the right to
elect (by written notice sent to the Master Servicer, the Trustee and the
Certificate Insurer), but shall not be obligated, to purchase for its own
account from the Trust Fund any Mortgage Loan which is 90 days or more
Delinquent in the manner and at the price specified in Section 2.04(b). The
purchase price for any Mortgage Loan purchased hereunder shall be deposited in
the Collection Account and the Trustee, upon receipt of such deposit, shall
release or cause to be released to the purchaser of such Mortgage Loan the
related Mortgage File and shall execute and deliver such instruments of transfer
or assignment prepared by the purchaser of such Mortgage Loan, in each case
without recourse, as shall be necessary to vest in the purchaser of such
Mortgage Loan any Mortgage Loan released pursuant hereto and the purchaser of
such Mortgage Loan shall succeed to all the Trustee's right, title and interest
in and to such Mortgage Loan and all security and documents related thereto.
Such assignment shall be an assignment outright and not for security. The
purchaser of such Mortgage Loan shall thereupon own such Mortgage Loan, and all
security and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
Section 5.19. Reports To Be Provided By The Master Servicer.
The Master Servicer agrees to make available on a reasonable basis to the
Certificate Insurer a knowledgeable financial or accounting officer for the
purpose of answering reasonable questions respecting recent developments
affecting the Master Servicer or the financial statements of the Master Servicer
and to permit the Certificate Insurer to inspect the Master Servicer's servicing
facilities during normal business hours for the purpose of satisfying the
Certificate Insurer that the Master Servicer has the ability to service the
Mortgage Loans in accordance with this Agreement.
63
69
Section 5.20. Adjustment of Servicing Compensation in Respect
of Prepaid Mortgage Loans. The aggregate amount of the Servicing Fees that the
Master Servicer and any Subservicer shall be entitled to receive with respect to
all of the Mortgage Loans and each Distribution Date shall be offset on such
Distribution Date by an amount equal to the aggregate Prepayment Interest
Shortfall with respect to all Mortgage Loans which were subjects of Principal
Prepayments in Full or Curtailments during the month preceding the month of such
Distribution Date. The amount of any offset against the aggregate Servicing Fee
with respect to any Distribution Date under this Section 5.20 shall be limited
to the aggregate amount of the Servicing Fees otherwise payable to the Master
Servicer and any Subservicer (without adjustment on account of Prepayment
Interest Shortfalls) with respect to (i) scheduled payments having the Due Date
occurring in the month of such Distribution Date received by the Master Servicer
or any Subservicer prior to the Master Servicer Remittance Date, and (ii)
Principal Prepayments in Full, Curtailments and Liquidation Proceeds received in
the month preceding the month in which such Distribution Date occurs, and the
rights of the Certificateholders to the offset of the aggregate Prepayment
Interest Shortfalls shall not be cumulative.
Section 5.21. Periodic Advances. If, on any Master Servicer
Remittance Date, the Master Servicer determines that any Monthly Payments due on
the Due Date immediately preceding such Master Servicer Remittance Date have not
been received as of the close of business on the Business Day preceding such
Master Servicer Remittance Date, the Master Servicer shall determine the amount
of any Periodic Advance required to be made with respect to the related
Distribution Date. The Master Servicer shall, on the Master Servicer Remittance
Date, deliver in a computer-readable form (including electronic transmission) to
the Trustee indicating the payment status of each Mortgage Loan as of the
Business Day prior to such Master Servicer Remittance Date. The Master Servicer
shall include in the amount to be deposited in the related Certificate Account
on such Master Servicer Remittance Date an amount equal to the Periodic Advance,
if any, which deposit may be made in whole or in part from funds in the
Collection Account being held for future distribution or withdrawal on or in
connection with Distribution Dates in subsequent months. Any funds being held
for future distribution to Certificateholders and so used shall be replaced by
the Master Servicer from its own funds by deposit in the related Certificate
Account on or before the Business Day preceding any such future Master Servicer
Remittance Date to the extent that funds in the related Certificate Account on
such Master Servicer Remittance Date shall be less than payments to
Certificateholders required to be made on such date.
The Master Servicer shall designate on its records the
specific Mortgage Loans and related installments (or portions thereof) as to
which such Periodic Advance shall be deemed to have been made, such
determination being conclusive for purposes of withdrawals from the Collection
Account pursuant to Section 5.04.
Section 5.22. Third Party Claims. The Trustee shall reimburse
the Seller from amounts otherwise distributable on the Class R Certificates for
all amounts advanced by the Seller pursuant to the second sentence of Section
_____________ of the Purchase Agreement except when the relevant claim relates
directly to the failure of the Seller to perform its duties in compliance with
the terms of the Purchase Agreement.
Section 5.23. Maintenance Of Corporate Existence And Licenses;
Merger Or Consolidation Of The Master Servicer. (a) The Master Servicer will
keep in full effect its existence, rights and franchises as a corporation, will
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement and will otherwise operate its business so as to cause the
representations and warranties under Section 3.01 to be true and correct at all
times under this Agreement.
64
70
(b) Any Person into which the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Master Servicer shall be a party, or any Person
succeeding to the business of the Master Servicer, shall be an established
mortgage loan servicing institution acceptable to the Certificate Insurer that
has a net worth of at least $[15,000,000], and in all events shall be the
successor of the Master Servicer without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Master Servicer shall send notice of any such
merger or consolidation to the Trustee and the Certificate Insurer.
Section 5.24. Assignment Of Agreement By Master Servicer;
Master Servicer Not To Resign. The Master Servicer shall not assign this
Agreement or resign from the obligations and duties hereby imposed on it except
by mutual consent of the Certificate Insurer and the Trustee or upon the
determination that the Master Servicer's duties hereunder are no longer
permissible under applicable law and that such incapacity cannot be cured by the
Master Servicer without incurring, in the reasonable judgment of the Certificate
Insurer, unreasonable expense. Any such determination that the Master Servicer's
duties hereunder are no longer permissible under applicable law permitting the
resignation of the Master Servicer shall be evidenced by a written Opinion of
Counsel (who may be counsel for the Master Servicer) to such effect delivered to
the Trustee, the Seller, the Company and the Certificate Insurer. No such
resignation shall become effective until the Trustee or a successor appointed in
accordance with the terms of this Agreement has assumed the Master Servicer's
responsibilities and obligations hereunder in accordance with Section 7.02. The
Master Servicer shall provide the Trustee, the Rating Agencies and the
Certificate Insurer with 30 days prior written notice of its intention to resign
pursuant to this Section 5.24.
Section 5.25. Information Reports To Be Filed By The Master
Servicer. The Master Servicer shall file (or cause any Subservicers to file)
information returns with respect to the receipt of mortgage interest received in
a trade or business, reports of foreclosures and abandonments of any Mortgaged
Property and cancellation of indebtedness income with respect to any Mortgaged
Property as required by Sections 6050H, 6050J and 6050P of the Code,
respectively.
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01. Establishment Of Certificate Accounts; Deposits
To The Certificate Accounts. (a) The Trustee shall establish and maintain two
separate Certificate Accounts which shall be Eligible Accounts and shall be
titled "Group I Certificate Account, [_________________________________], as
trustee for the registered holders of [Xxxxxx Xxxxxxx ABS Capital I Inc.],
Mortgage Loan Asset-Backed Pass-Through Certificates, Series 199__-__, Class
A-1, Class I S and Class R" and "Group II Certificate Account,
[_________________________________], as trustee for the registered holders of
[Xxxxxx Xxxxxxx ABS Capital I Inc.], Mortgage Loan Asset-Backed Pass Through
Certificates, Series 199__-__, Class A-2, Class II S and Class R."
(b) From the period from each Master Servicer Remittance Date
to the Business Day prior to each Distribution Date, the Master Servicer may
direct the Trustee in writing to invest the funds in the Certificate Accounts
only in Permitted Investments. From the Business Day prior to each Distribution
Date to such Distribution Date, the Trustee shall invest the funds in the
Certificate Accounts only in Permitted Investments. No Permitted Investment
shall be sold or disposed of at a gain prior to maturity unless the Master
Servicer or Trustee, as applicable, has received an Opinion of Counsel (at the
65
71
Master Servicer's or Trustee's expense, as applicable) that such sale or
disposition will not cause the Trust Fund to be subject to the tax on income
from prohibited transactions imposed by Section 860F(a)(1) of the Code,
otherwise subject the Trust Fund to tax or cause the Trust Fund to fail to
qualify as a REMIC. All net income (other than any gain from a sale or
disposition of the type referred to in the preceding sentence) realized from any
such Permitted Investment shall be for the benefit of the Master Servicer or
Trustee, as applicable, as additional compensation. The amount of any losses
incurred in respect of any such Permitted Investments held therein which is in
excess of the income and gain thereon shall be deposited in the related
Certificate Account by the Master Servicer or Trustee, as applicable, out of its
own funds immediately as realized.
(c) On each Master Servicer Remittance Date, the Master
Servicer shall cause to be deposited in the Group I and Group II Certificate
Accounts, from funds on deposit in the Collection Account, an amount equal to
the related Master Servicer Remittance Amount with respect to Loan Group I and
Loan Group II respectively.
Section 6.02. Permitted Withdrawals From The Certificate
Accounts. The Trustee shall withdraw or cause to be withdrawn funds from the
Certificate Accounts for the following purposes:
(a) to effect the distributions described in Section 6.05;
(b) to pay to the Seller with respect to each Mortgage Loan or
property acquired in respect thereof that has been repurchased or
replaced pursuant to Section 2.04 or 3.03 or to pay to the Master
Servicer with respect to each Mortgage Loan or property acquired in
respect thereof that has been purchased all amounts received thereon
and not required to be distributed as of the date on which the related
repurchase or purchase price or Principal Balance was determined;
(c) on the Business Day prior to each Distribution Date, to
pay the Master Servicer any interest earned on or investment income
earned with respect to funds in the Certificate Accounts up to the
Business Day immediately prior to such Distribution Date;
(d) on each Distribution Date, to pay itself any interest
earned on or investment income earned with respect to funds in the
Certificate Accounts from the Business Day immediately prior to such
Distribution Date to such Distribution Date;
(e) to return to the Collection Account any amount deposited
in a Certificate Account that was not required to be deposited therein;
(f) to make reimbursements to itself in accordance with
Section 9.05; and
(g) to clear and terminate the Certificate Accounts upon
termination of any of the Trust Fund pursuant to Article VIII.
The Trustee shall keep and maintain a separate accounting for
withdrawals from the Certificate Accounts pursuant to each of subclauses (a)
through (f) listed above.
Section 6.03. Collection Of Money. Except as otherwise
expressly provided herein, the Trustee may demand payment or delivery of all
money and other property payable to or receivable by the Trustee pursuant to
this Agreement, including (a) all payments due on the Mortgage Loans in
accordance with the respective terms and conditions of such Mortgage Loans and
required to be paid over to the Trustee by the Master Servicer or by any
Subservicer and (b) Insured Payments. The Trustee shall
66
72
hold all such money and property received by it, as part of the Trust Fund and
shall apply it as provided in this Agreement.
Section 6.04. The Certificate Insurance Policy. (a) Within two
Business Days after each Master Servicer Remittance Date the Trustee shall
determine with respect to the immediately following Distribution Date the amount
to be on deposit in the Certificate Accounts on such Distribution Date as a
result of the Master Servicer's remittance of the Master Servicer Remittance
Amount on the related Master Servicer Remittance Date plus the amount of any
amounts deposited into the Certificate Accounts from the related Pre-Funding
Account pursuant to Section 6.12 and any Interest Coverage Additions to be
deposited pursuant to Section 6.13 for such Distribution Date, less the amounts
described in clauses (i) through (ii) of Section 6.05(b) or (c) for the related
Distribution Date, and not including the amount of any Insured Payment which is
required to be deposited in the related Certificate Account for such
Distribution Date. The amounts described in the preceding sentence, as
determined separately with respect to the Group I Loans, and Group II Loans,
with respect to each Distribution Date are the "Group I Available Funds" and
"Group II Available Funds" for such Distribution Date.
(b) If on any Distribution Date there is an Available Funds
Shortfall, the Trustee shall complete a Notice in the form of Exhibit ___ to the
related Certificate Insurance Policy and submit such notice to the Certificate
Insurer no later than 12:00 noon New York City time on the second Policy
Business Day preceding such Distribution Date as a claim for an Insured Payment
in an amount equal to such Available Funds Shortfall.
(c) The Trustee shall establish a separate Eligible Account
for the benefit of Holders of the Certificates and the Certificate Insurer
referred to herein as the "Certificate Insurance Payments Account" over which
the Trustee shall have exclusive control and sole right of withdrawal. The
Trustee shall deposit upon receipt any amount paid under the Certificate
Insurance Policy in the Certificate Insurance Payments Account and distribute
such amount only for purposes of payment to Certificateholders of the Group I
Insured Distribution Amount or Group II Insured Distribution Amount for which a
claim was made and such amount may not be applied to satisfy any costs, expenses
or liabilities of the Master Servicer, the Trustee or the Trust Fund. Amounts
paid under the Certificate Insurance Policy, to the extent needed to pay the
Group I Insured Distribution Amount or Group II Insured Distribution Amount
shall be transferred by the Trustee from the Certificate Insurance Payments
Account to the related Certificate Account on the related Distribution Date and
disbursed by the Trustee to Certificateholders in accordance with Section 6.05.
It shall not be necessary for payments made under the Certificate Insurance
Policy to be made by checks or wire transfers separate from other amounts
distributed pursuant to Section 6.05. However, the amount of any payment of
principal or of interest on the Certificates to be paid from funds transferred
from the Certificate Insurance Payments Account shall be noted as provided in
paragraph (d) below. Funds held in the Certificate Insurance Payments Account
shall not be invested. Any funds remaining in the Certificate Insurance Payments
Account on the first Policy Business Day following a Distribution Date shall be
returned to the Certificate Insurer pursuant to the written instructions of the
Certificate Insurer by the end of such Policy Business Day.
(d) The Trustee Remittance Report shall indicate the amount of
interest and principal paid in respect of the Class A-1 Certificates and the
Class A-2 Certificates from moneys received under the Certificate Insurance
Policy.
(e) In the event that the Trustee has received a certified
copy of an order of the appropriate court that any Insured Payment has been
voided in whole or in part as a preference payment under applicable bankruptcy
law, the Trustee shall so notify the Certificate Insurer, shall comply with the
provisions of the Certificate Insurance Policy to obtain payment by the
Certificate Insurer of such
67
73
voided Insured Payment, and shall, at the time it provides notice to the
Certificate Insurer, notify, by mail to Certificateholders of the affected
Certificates that, in the event any Certificateholder's Insured Payment is so
recovered, such Certificateholder will be entitled to payment pursuant to the
Certificate Insurance Policy, a copy of which shall be made available through
the Trustee, the Certificate Insurer or the Certificate Insurer's fiscal agent,
if any, and the Trustee shall furnish to the Certificate Insurer or its fiscal
agent, if any, its records evidencing the payments which have been made by the
Trustee and subsequently recovered from Certificateholders, and dates on which
such payments were made.
(f) The Trustee shall promptly notify the Certificate Insurer
of any proceeding or the institution of any action, of which a Responsible
Officer of the Trustee has actual knowledge, seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law (a "Preference Claim") of any distribution made with respect to the
Certificates. Each Certificateholder, by its purchase of Certificates, the
Master Servicer and the Trustee agree that, the Certificate Insurer (so long as
no Certificate Insurer Default exists) may at any time during the continuation
of any proceeding relating to a Preference Claim direct all matters relating to
such Preference Claim, including, without limitation, (i) the direction of any
appeal of any order relating to such Preference Claim and (ii) the posting of
any surety, supersedeas or performance bond pending any such appeal. In addition
and without limitation of the foregoing, the Certificate Insurer shall be
subrogated to, and each Certificateholder, the Master Servicer and the Trustee
hereby delegate and assign to the Certificate Insurer, to the fullest extent
permitted by law, the rights of the Master Servicer, the Trustee and each
Certificateholder in the conduct of any such Preference Claim, including,
without limitation, all rights of any party to any adversary proceeding or
action with respect to any court order issued in connection with any such
Preference Claim.
Section 6.05. Distributions. (a) No later than 12:00 noon [New
York] time on each Master Servicer Remittance Date, the Master Servicer shall
deliver to the Trustee a report in computer-readable form (including electronic
transmission, provided that a portion of such report relating to certain
delinquency information may be delivered in hard copy form rather than
computer-readable form) containing such information as to each Mortgage Loan as
of such date and such other information as the Trustee shall reasonably require.
(b) With respect to funds deposited in the Group I Certificate
Account, on each Distribution Date, the Trustee shall make the following
allocations, disbursements and transfers in the following order of priority, and
each such allocation, transfer and disbursement shall be treated as having
occurred only after all preceding allocations, transfers and disbursements have
occurred:
(i) commencing with the Distribution Date occurring in
___________________, 199___, to the Certificate Insurer, the Premium
Amount with respect to the Group I Loans;
(ii) to the Trustee, an amount equal to the Trustee's Fees
then due to it with respect to the Group I Loans;
(iii) to the Certificate Insurer the lesser of (x) an amount
equal to (i) the amount then on deposit in the Group I Certificate
Account remaining after the foregoing distributions minus (ii) the
Group I Insured Distribution Amount for such Distribution Date and (y)
the outstanding Group I Reimbursement Amounts, if any, as of such
Distribution Date;
(iv) from amounts then on deposit in the Group I Certificate
Account (including any Group I Insured Payments), to the Class A-1
Certificateholders an amount equal to the Group I Class A Interest
Distribution Amount;
68
74
(v) from amounts then on deposit in the Group I Certificate
Account (including any Group I Insured Payments), to the Class A-1
Certificateholders an amount equal to the lesser of (a) the Group I
Class A Principal Distribution Amount (to the extent not covered by
payments to be made pursuant to Section 6.05(c)(vi) below) and (b) the
amount remaining in the Group I Certificate Account after distributions
pursuant to clauses (i) through (iv) above, in the manner described
below;
(vi) from amounts then on deposit in the Group I Certificate
Account, to the Class A-2 Certificateholders, on any Distribution Date
where a Group II Subordination Deficit exists, an amount equal to such
Group II Subordination Deficit;
(vii) from amounts then on deposit in the Group I Certificate
Account, to the Class A-2 Certificateholders, on any Distribution Date
when, following distributions to be made on such date, the Group II
Subordinated Amount would be less than the Group II Required
Subordinated Amount, an amount equal to such difference;
(viii) from amounts then on deposit in the Group I Certificate
Account, to the Certificate Insurer, an amount equal to the sum of the
outstanding Group II Reimbursement Amount remaining unpaid and the
amount of any Insured Payment made to the Class A-2 Certificates on
such Distribution Date following any distributions made on such
Distribution Date pursuant to Section 6.05(c)(v);
(ix) from amounts then on deposit in the Group I Certificate
Account, to the Class A-1 Certificateholders the amount equal to the
lesser of (i) any amount then remaining in the Group I Certificate
Account after distributions to clauses (i) through (viii) above and
(ii) the aggregate Group I Class A Available Funds Cap Carry-Forward
Amount shall be paid to the Class A-1 Certificateholders on account of
the Group I Class A Available Funds Cap Carry-Forward Amount, if any;
(x) from amounts then on deposit in the Group I Certificate
Account, to the Class I S Certificateholders an amount equal to the
related Class S Interest Distribution Amount to the extent not added to
the Certificate Principal Balance thereof as described below;
(xi) from amounts then on deposit in the Group I Certificate
Account, to the Class I S Certificateholders the amount remaining on
such Distribution Date, if any, until the Certificate Principal
Balances thereof are reduced to zero; and
(xii) from amounts then on deposit in the Group I Certificate
Account, to the Holders of the Class R Certificates, the amount
remaining on such Distribution Date, if any.
Notwithstanding clause (v) above, the aggregate amounts distributed on all
Distribution Dates to the Holders of the Class A-1 Certificates on account of
the Group I Class A Principal Distribution Amount shall not exceed the Original
Group I Certificate Principal Balance for the Class A-1 Certificates.
Distributions of the Group I Class A Principal Distribution
Amount and amounts allocated pursuant to Section 6.05(c)(vi) and (vii) will be
allocated to the Class A-1 Certificates in reduction of the Certificate
Principal Balance thereof, until the Certificate Principal Balance thereof has
been reduced to zero.
On each Distribution Date, an amount equal to the Group I
Subordination Increase Amount for such date will be added to the Certificate
Principal Balances of the Class I S Certificates.
69
75
(b) With respect to funds deposited in the Group II
Certificate Account, on each Distribution Date, the Trustee shall make the
following allocations, disbursements and transfers in the following order of
priority, and each such allocation, transfer and disbursement shall be treated
as having occurred only after all preceding allocations, transfers and
disbursements have occurred:
(i) commencing with the Distribution Date occurring in
__________________, 199___, to the Certificate Insurer, the Premium
Amount with respect to the Group II Loans;
(ii) to the Trustee, an amount equal to the Trustee's Fees
then due to it with respect to the Group II Loans;
(iii) to the Certificate Insurer the lesser of (x) an amount
equal to (i) the amount then on deposit in the Group II Certificate
Account remaining after the foregoing distributions minus (ii) the
Group II Insured Distribution Amount for such Distribution Date and (y)
the outstanding Group II Reimbursement Amounts, if any, as of such
Distribution Date;
(iv) from amounts then on deposit in the Group II Certificate
Account (including any Group II Insured Payments), to the Class A-2
Certificateholders, an amount equal to the Group II Class A Interest
Distribution Amount;
(v) from amounts then on deposit in the Group II Certificate
Account (including any Group II Insured Payments), to the Class A-2
Certificateholders an amount equal to the lesser of (a) the Group II
Class A Principal Distribution Amount (to the extent not covered by
payments to be made pursuant to Section 6.05(b)(vi) above) and (b) the
amount remaining in the Group II Certificate Account after
distributions pursuant to clauses (i) through (iv) above, in reduction
of the Certificate Principal Balance of the Class A-2 Certificates,
until the Certificate Principal Balance of the Class A-2 Certificates
has been reduced to zero;
(vi) from amounts then on deposit in the Group II Certificate
Account, to the Certificate Insurer, an amount equal to the sum of the
outstanding Group I Reimbursement Amount remaining unpaid and any
Insured Payment made with respect to the Class A-1 Certificates on such
Distribution Date following any distributions made on such Distribution
Date pursuant to Section 6.05(b)(v);
(vii) from amounts then on deposit in the Group II Certificate
Account, to the Class II S Certificateholders, an amount equal to the
related Class S Interest Distribution Amount to the extent not added to
the Certificate Principal Balance thereof as described below;
(viii) from amounts then on deposit in the Group II
Certificate Account, to the Class II S Certificateholders, the amount
remaining on such Distribution Date, if any, until the Certificate
Principal Balances thereof are reduced to zero; and
(ix) from amounts then on deposit in the Group II Certificate
Account, to the Holders of the Class R Certificates, the amount
remaining on such Distribution Date, if any.
Notwithstanding clause (v) above, the aggregate amounts distributed on all
Distribution Dates to the Holders of the Class A-2 Certificates on account of
the Group II Class A Principal Distribution Amount shall not exceed the Original
Group II Certificate Principal Balance for the Class A-2 Certificates.
70
76
On each Distribution Date, an amount equal to the Group II
Subordination Increase Amount for such date will be added to the Certificate
Principal Balances of the Class II S Certificates.
Section 6.06. Investment Of Accounts. (a) So long as no Event
of Default shall have occurred and be continuing, and consistent with any
requirements of the Code, all or a portion of any Account (other than the
Certificate Insurance Payments Account) held by the Trustee shall be invested
and reinvested by the Trustee, as directed in writing by the Master Servicer
(with respect to the Certificate Accounts up to the Business Day prior to each
Distribution Date) or the Trustee (with respect to the Certificate Accounts from
the Business Day prior to each Distribution Date to such Distribution Date) or
the Company (with respect to the Pre-Funding Accounts and the Interest Coverage
Accounts) in one or more Permitted Investments bearing interest or sold at a
discount. If an Event of Default shall have occurred and be continuing or if the
Master Servicer or the Company does not provide investment directions, the
Trustee shall invest all Accounts in Permitted Investments described in
paragraph (d) of the definition of Permitted Investments. No such investment in
any Account shall mature later than the Business Day immediately preceding the
next Distribution Date (except that if such Permitted Investment is an
obligation of the Trustee, then such Permitted Investment shall mature not later
than such Distribution Date).
(b) If any amounts are needed for disbursement from any
Account held by the Trustee and sufficient uninvested funds are not available to
make such disbursement, the Trustee shall cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such Account. The
Trustee shall not be liable for any investment loss or other charge resulting
therefrom unless the Trustee's failure to perform in accordance with this
Section 6.06 is the cause of such loss or charge.
(c) Subject to Section 9.01 hereof, the Trustee shall not in
any way be held liable by reason of any insufficiency in any Account held by the
Trustee resulting from any investment loss on any Permitted Investments included
therein other than with respect to the investment of funds in the Certificate
Accounts from the Business Day prior to each Distribution Date to such
Distribution Date, and except to the extent that the Trustee is the obligor and
has defaulted thereon or as provided in subsection (b) of this Section 6.06.
(d) So long as no Event of Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in any Account (excluding the Pre-Funding Accounts
and the Interest Coverage Accounts) shall be for the benefit of the Master
Servicer as compensation (in addition to the Servicing Fee) and the benefit of
the Trustee as compensation (in addition to the Trustee Fee). The Master
Servicer and the Trustee shall deposit in each Account (excluding the
Pre-Funding Accounts and the Interest Coverage Accounts) and the Company shall
deposit in each Pre-Funding Account and Interest Coverage Account, from its own
funds, the amount of any loss incurred in respect of any Permitted Investment
held therein which is in excess of the income and gain thereon immediately upon
realization of such loss, without any right to reimbursement therefor; provided,
however, that the Master Servicer shall only be responsible for the
reimbursement of losses in the Certificate Accounts up until the Business Day
prior to each Distribution Date, and the Trustee shall only be responsible for
the reimbursement of losses from the Business Day prior to each Distribution
Date to such Distribution Date.
Section 6.07. Reports By Trustee. (bg) On each Distribution
Date the Trustee shall provide to each Holder, to the Master Servicer, to the
Certificate Insurer, to the Underwriter, to the Company and to the Rating
Agencies a written report (the "Trustee Remittance Report"), based solely on
information provided by the Master Servicer and containing the following
information:
71
77
(i) the amount of the distribution with respect to each class
of the Class A Certificates, Class S Certificates and Class R
Certificates;
(ii) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Prepayments in Full
and Curtailments or other unscheduled recoveries of principal included
therein and separately identifying any Subordination Increase Amounts;
(iii) the amount of such distributions allocable to interest
and the calculation thereof;
(iv) the Certificate Principal Balance of each class of the
Class A Certificates and Class S Certificates as of such Distribution
Date, together with the principal amount of each class of the Class A
Certificates and Class S Certificates (based on a Certificate in an
original principal amount of $1,000) then outstanding, in each case
after giving effect to any payment of principal on such Distribution
Date;
(v) the amount of any Insured Payment included in the amounts
distributed to the Class A Certificateholders on such Distribution
Date;
(vi) the Required Subordinated Amount and the Subordinated
Amount as of such Distribution Date;
(vii) the total of any Substitution Adjustments and any Loan
Repurchase Price amounts included in such distribution;
(viii) the amounts, if any, of any Liquidation Loan Losses for
the related Due Period and the cumulative amount of Liquidated Loan
Losses from the Closing Date;
(ix) the number of Mortgage Loans and the aggregate Stated
Principal Balance of Mortgage Loans purchased pursuant to Section 5.18
for the related Distribution Date and since the closing date the
cumulative number and Stated Principal Balance of Mortgage Loans
purchased pursuant to Section 5.18.
(x) the number of Mortgage Loans and the aggregate Stated
Principal Balance of Mortgage Loans purchased or substituted for
pursuant to Sections 3.03 and 2.04 for the related Distribution Date
and, since the closing date, the cumulative number and Stated Principal
Balance of Mortgage Loans purchased or substituted for pursuant to
Sections 3.03 and 2.04;
(xi) the applicable Pass-Through Rate for each class of Class
A Certificates and Class S Certificates for such distribution;
(xii) the amount on deposit in the Pre-Funding Accounts and
the Interest Coverage Accounts;
(xiii) for the Distribution Date occurring in
_______________________, 199___, the balances of the Pre-Funded Amounts
that have not been used to purchase Subsequent Mortgage Loans and that
are being distributed to the Class A Certificateholders as a mandatory
prepayment of principal, if any, on such Distribution Date;
72
78
(xiv) the amount, if any, of the Interest Coverage Addition
included in such distribution for each Loan Group; and (xiii) the
amount, if any, of any Group I Class A Available Funds Cap
Carry-Forward Amount.
Items (i), (ii) and (iii) above shall, with respect to the Class A Certificates,
be presented on the basis of a Certificate having a $1,000 denomination. In
addition, by _________________ of each calendar year following any year during
which the Certificates are outstanding, the Trustee shall furnish a report to
each Holder of record if so requested in writing at any time during each
calendar year as to the aggregate of amounts reported pursuant to (i), (ii) and
(iii) with respect to the Certificates for such calendar year.
(b) All distributions made to the Class A Certificateholders,
Class S Certificateholders and the Class R Certificateholders as a Class on each
Distribution Date will be made on a pro rata basis among the Certificateholders
of such Class on the next preceding Record Date based on the Percentage Interest
represented by their respective Certificates, and shall be made by wire transfer
of immediately available funds to the account of such Certificateholder at a
bank or other entity having appropriate facilities therefor, if, in the case of
a Class A Certificateholder, such Certificateholder shall own of record
Certificates of the same Class which have denominations aggregating at least
$[5,000,000] appearing in the Certificate Register and shall have provided
complete wiring instructions by the Record Date, and otherwise by check mailed
to the address of such Certificateholder appearing in the Certificate Register.
(c) In addition, on each Distribution Date the Trustee will
distribute to each Holder, to the Certificate Insurer, to the Underwriters, to
the Master Servicer, to the Company and to the Rating Agencies, together with
the information described in subsection (a) preceding, the following information
with respect to the Group I and Group II Loans as of the close of business on
the last Business Day of the prior calendar month, which is hereby required to
be prepared by the Master Servicer and furnished to the Trustee for such purpose
on or prior to the related Master Servicer Remittance Date (such information to
be provided for the Group I and Group II Loans separately):
(i) the total number of Mortgage Loans and the aggregate
Principal Balances thereof, together with the number and aggregate
principal balances of such Mortgage Loans and the percentage (based on
the aggregate Principal Balances of the Mortgage Loans) of the
aggregate Principal Balances of such Mortgage Loans to the aggregate
Principal Balance of all Mortgage Loans (a) 30-59 days Delinquent, (B)
60-89 days Delinquent and (C) 90 or more days Delinquent;
(ii) the number and aggregate Principal Balances of all
Mortgage Loans and percentage (based on the aggregate Principal
Balances of the Mortgage Loans) of the aggregate Principal Balances of
such Mortgage Loans to the aggregate Principal Balance of all Mortgage
Loans in foreclosure proceedings and the number and aggregate Principal
Balances of all Mortgage Loans and percentage (based on the aggregate
Principal Balances of the Mortgage Loans) of any such Mortgage Loans
which are also included in any of the statistics described in the
foregoing clauses (i)(A), (i)(B) and (i)(C);
(iii) the number and aggregate Principal Balances of all
Mortgage Loans and percentage (based on the aggregate Principal
Balances of the Mortgage Loans) of the aggregate Principal Balances of
such Mortgage Loans to the aggregate Principal Balance of all Mortgage
Loans relating to Mortgagors in bankruptcy proceedings and the number
and aggregate Principal Balances of all Mortgage Loans and percentage
(based on the aggregate Principal Balances of the
73
79
Mortgage Loans) of any such Mortgage Loans which are also included in
any of the statistics described in the foregoing clauses (i)(A), (i)(B)
and (i)(C);
(iv) the number and aggregate Principal Balances of all
Mortgage Loans and percentage (based on the aggregate Principal
Balances of the Mortgage Loans) of the aggregate Principal Balances of
such Mortgage Loans to the aggregate Principal Balance of all Mortgage
Loans relating to REO Properties and the number and aggregate Principal
Balances of all Mortgage Loans and percentage (based on the aggregate
Principal Balances of the Mortgage Loans) of any such Mortgage Loans
which are also included in any of the statistics described in the
foregoing clause (i)(A), (i)(B) and (i)(C);
(v) the weighted average Mortgage Interest Rate as of the Due
Date occurring in the Due Period related to such Distribution Date;
(vi) the weighted average remaining term to stated maturity of
all Mortgage Loans;
(vii) the book value of any REO Property; and
(viii) the number and aggregate Principal Balance of all
Subsequent Mortgage Loans added during the preceding Due Period.
Section 6.08. Additional Reports By Trustee. (a) The Trustee
shall report to the Company, the Master Servicer and the Certificate Insurer
with respect to the amount then held in each Account (including investment
earnings accrued or scheduled to accrue) held by the Trustee and the identity of
the investments included therein, as the Company, the Master Servicer or the
Certificate Insurer may from time to time request in writing.
(b) From time to time, at the request of the Certificate
Insurer, the Trustee shall report to the Certificate Insurer with respect to its
actual knowledge, without independent investigation, of any breach of any of the
representations or warranties relating to individual Mortgage Loans set forth in
the Purchase Agreement or in Section 3.01 or 3.02 hereof.
(c) On each Distribution Date, the Trustee shall provide
[Bloomberg Financial Markets, L.P. ("Bloomberg") Certificate Factors] for each
class of Certificates as of such Distribution Date, using a format and media
mutually acceptable to the Trustee and [Bloomberg].
Section 6.09. Compensating Interest. Not later than the close
of business on the third Business Day prior to the Distribution Date, the Master
Servicer or any Subservicer shall remit to the Trustee (without right or
reimbursement therefor) for deposit into the related Certificate Account an
amount equal to the lesser of (a) the aggregate of the Prepayment Interest
Shortfalls for the related Distribution Date resulting from Principal
Prepayments in Full and Curtailments during the related Due Period and (b) its
aggregate Servicing Fees payable in the related Due Period and shall not have
the right to reimbursement therefor (the "Compensating Interest").
Section 6.10. Effect Of Payments By The Certificate Insurer;
Subrogation. Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Class A Certificates which is made
with moneys received pursuant to the terms of the Certificate Insurance Policy
shall not be considered payment of the Certificates from the Trust Fund. The
Company, the Master Servicer and the Trustee acknowledge, and each Holder by its
acceptance of a Certificate agrees, that without the need for any further action
on the part of the Certificate Insurer, the Company, the
74
80
Master Servicer or the Trustee (a) to the extent the Certificate Insurer makes
payments, directly or indirectly, on account of principal of or interest on the
Class A Certificates to the Holders of such Certificates, the Certificate
Insurer will be fully subrogated to, and each Certificateholder, the Master
Servicer and the Trustee hereby delegate and assign to the Certificate Insurer,
to the fullest extent permitted by law, the rights of such Holders to receive
such principal and interest from the Trust Fund, including, without limitation,
any amounts due to the Certificateholders in respect of securities law
violations arising from the offer and sale of the Class A Certificates, and (b)
the Certificate Insurer shall be paid such amounts but only from the sources and
in the manner provided herein for the payment of such amounts. The Trustee and
the Master Servicer shall cooperate in all respects with any reasonable request
by the Certificate Insurer for action to preserve or enforce the Certificate
Insurer's rights or interests under this Agreement without limiting the rights
or affecting the interests of the Holders as otherwise set forth herein.
Section 6.11. Allocation Of Liquidated Loan Losses. Prior to
each Distribution Date the Master Servicer shall determine the total amount of
related Liquidated Loan Losses, if any, that occurred during the related Due
Period with respect to the Group I Loans and the Group II Loans. The amount of
such Liquidated Loan Losses shall be evidenced by an Officer's Certificate to be
delivered to the Trustee not later than the Master Servicer Remittance Date. On
each Distribution Date, the principal portion of all Liquidated Loan Losses on
the Mortgage Loans in Loan Group I shall be allocated in reduction of the
Certificate Principal Balance of the Class I S Certificates, until the
Certificate Principal Balance thereof has been reduced to zero. On each
Distribution Date, the principal portion of all Liquidated Loan Losses on the
Mortgage Loans in Loan Group II shall be allocated in reduction of the
Certificate Principal Balance of the Class II S Certificates, until the
Certificate Principal Balance thereof has been reduced to zero. In each case
above, Liquidated Loan Losses after the Certificate Principal Balances of the
Certificates described above have been reduced to zero shall not be allocated to
any specific class of related Certificates, but shall increase the Group I
Subordination Deficit or Group II Subordination Deficit, as applicable, in the
manner described in this Agreement.
Section 6.12. Pre-Funding Accounts.
(bh) No later than the Closing Date, the Trustee shall
establish and maintain with itself one or more segregated trust accounts that
are Eligible Accounts, which shall be titled "Group I Pre- Funding Account,
[_________________________________], as trustee for the registered holders of
[Xxxxxx Xxxxxxx ABS Capital I Inc.], Mortgage Loan Asset-Backed Pass-Through
Certificates, Series 199__-__" (the "Group I Pre-Funding Account") and one or
more segregated trust accounts that are Eligible Accounts, which shall be titled
"Group II Pre-Funding Account, [_________________________________], as trustee
for the registered holders of [Xxxxxx Xxxxxxx ABS Capital I Inc.], Mortgage Loan
Asset-Backed Pass-Through Certificates, Series 199__-__" (the "Group II
Pre-Funding Account"). The Trustee shall, promptly upon receipt, deposit (a) in
the Group I Pre- Funding Account and retain therein the Original Pre-Funded
Amount with respect to Loan Group I remitted on the Closing Date to the Trustee
by the Company and (b) in the Group II Pre-Funding Account and retain therein
the Original Pre-Funded Amount with respect to Loan Group II remitted on the
Closing Date to the Trustee by the Company. Funds deposited in the Group I
Pre-Funding Account shall be held in trust by the Trustee for the Holders of the
Group I Certificates and the Certificate Insurer for the uses and purposes set
forth herein. Funds deposited in the Group II Pre-Funding Account shall be held
in trust by the Trustee for the Holders of the Group II Certificates and the
Certificate Insurer for the uses and purposes set forth herein. If the Trustee
shall not have received an investment direction from the Company, the Trustee
will invest funds deposited in the Pre-Funding Accounts in Permitted Investments
of the kind described in clause (d) of the definition of Permitted Investments
with a maturity date no later than the second Business Day preceding each
Distribution Date. For federal income tax purposes, the
75
81
Company shall be the owner of the Pre-Funding Accounts and shall report all
items of income, deduction, gain or loss arising therefrom. All income and gain
realized from investment of funds deposited in the Group I Pre-Funding Account
shall be transferred to the Group I Interest Coverage Account on the Business
Day immediately preceding each Distribution Date. All income and gain realized
from investment of funds deposited in the Group II Pre-Funding Account shall be
transferred to the Group II Interest Coverage Account. The Company shall deposit
in the related Pre-Funding Account the amount of any net loss incurred in
respect of any such Permitted Investment immediately upon realization of such
loss without any right of reimbursement therefor.
(bi) Amounts on deposit in the Group I Pre-Funding Account
shall be withdrawn by the Trustee as follows:
(i) On any Subsequent Transfer Date, the Trustee
shall withdraw from the Group I Pre-Funding Account an amount
equal to 100% of the Principal Balances of the Subsequent
Mortgage Loans transferred and assigned to the Trustee for
Loan Group I on such Subsequent Transfer Date and pay such
amount to or upon the order of the Company upon satisfaction
of the conditions set forth in Section 2.08(b) with respect to
such transfer and assignment; and
(ii) If the Group I Pre-Funded Amount has not been
reduced to zero during the Funding Period, on the Master
Servicer Remittance Date immediately prior to the Distribution
Date occurring in __________________ 199___, the Trustee shall
deposit into the Group I Certificate Account any amounts
remaining in the Group I PreFunding Account.
(bj) Amounts on deposit in the Group II Pre-Funding Account
shall be withdrawn by the Trustee as follows:
(i) On any Subsequent Transfer Date, the Trustee
shall withdraw from the Group II Pre-Funding Account an amount
equal to 100% of the Principal Balances of the Subsequent
Mortgage Loans transferred and assigned to the Trustee for
Loan Group II on such Subsequent Transfer Date and pay such
amount to or upon the order of the Company upon satisfaction
of the conditions set forth in Section 2.08(b) with respect to
such transfer and assignment; and
(ii) If the Group II Pre-Funded Amount has not been
reduced to zero during the Funding Period, on the Master
Servicer Remittance Date immediately prior to the Distribution
Date occurring in ___________________, 199___, the Trustee
shall deposit into the Group II Certificate Account any
amounts remaining in the Group II PreFunding Account.
Section 6.13. Interest Coverage Accounts.
(a) No later than the Closing Date, the Trustee shall
establish and maintain with itself two separate, segregated trust accounts,
which shall be Eligible Accounts, titled "Group I Interest Coverage Account,
[_________________________________], as trustee for the registered holders of
[[Xxxxxx Xxxxxxx ABS Capital I Inc.]] Mortgage Loan Asset-Backed Pass-Through
Certificates, Series 199__-__" (the "Group I Interest Coverage Account") and
"Group II Interest Coverage Account, [_________________________________], as
trustee for the registered holders of [[Xxxxxx Xxxxxxx ABS Capital I Inc.]]
Mortgage Loan Asset-Backed Pass-Through Certificates, Series 199__-__" (the
"Group II
76
82
Interest Coverage Account"). The Trustee shall, promptly upon receipt, deposit
(a) in the Group I Interest Coverage Account and retain therein the Group I
Interest Coverage Amount remitted on the Closing Date to the Trustee by the
Company and (b) in the Group II Interest Coverage Account and retain therein the
Group II Interest Coverage Amount remitted on the Closing Date to the Trustee by
the Company. In addition, the Trustee shall deposit into the Group I Interest
Coverage Account all income and gain on investments in the Group I Pre-Funding
Account and shall deposit into the Group II Interest Coverage Account all income
and gain on investments in the Group II Pre-Funding Account pursuant to Section
6.12. Funds deposited in the Group I Interest Coverage Account shall be held in
trust by the Trustee for the Holders of the Group I Certificates and the
Certificate Insurer for the uses and purposes set forth herein. Funds deposited
in the Group II Interest Coverage Account shall be held in trust by the Trustee
for the Holders of the Group II Certificates and the Certificate Insurer for the
uses and purposes set forth herein. For federal income tax purposes, the Company
shall be the owner of the Interest Coverage Accounts and shall report all items
of income, deduction, gain or loss arising therefrom. The Company shall deposit
in the related Interest Coverage Account the amount of any net loss incurred in
respect of any such Permitted Investment immediately upon realization of such
loss without any right of reimbursement therefor.
(b) On each of the first two Distribution Dates, the Trustee
shall (a) withdraw from the Group I Interest Coverage Account and deposit in the
Group I Certificate Account the related Interest Coverage Addition and (b)
withdraw from the Group II Interest Coverage Account and deposit in the Group II
Certificate Account the related Interest Coverage Addition.
(c) On each Distribution Date following the conveyance of a
Subsequent Mortgage Loan to the Trustee for Loan Group I, funds on deposit in
the Group I Interest Coverage Account in an amount equal to 1/360 of the product
of (i) the Principal Balance of such Subsequent Mortgage Loan and (ii) the sum
of (a) the Group I Class A Pass-Through Rate for such Distribution Date minus
_______% and (B) ________%, and (iii) the actual number of days from the
Subsequent Cut-off Date to _____________________, 199____, shall be remitted,
without notice, immediately upon receipt thereof, to the Company.
On each Distribution Date following the conveyance of a
Subsequent Mortgage Loan to the Trustee for Loan Group II, funds on deposit in
the Group II Interest Coverage Account in an amount equal to 1/360 of the
product of (i) the Principal Balance of such Subsequent Mortgage Loan and (ii)
the sum of (a) the weighted average Group II Class A Pass-Through Rate for such
Distribution Date minus _______% and (B) _______%, and (iii) the number of days,
up to a maximum of 30 per calendar month, from the Subsequent Cut-off Date to
_________________, 199___, shall be remitted, without notice, immediately upon
receipt thereof to the Company.
(d) Upon the earlier of (i) termination of the Trust Fund in
accordance with Section 8.01 and (ii) the first Business Day following the first
Distribution Date following the conveyance of the last Subsequent Mortgage Loan
to the Trustee for Loan Group I, any amount remaining on deposit in the Group I
Interest Coverage Account after distributions pursuant to Sections 6.13(b) above
shall be withdrawn by the Trustee and paid to the Company.
Upon the earliest of (i) the reduction of the Certificate
Principal Balance of the Class A-2 Certificates to zero, (ii) the termination of
the Trust Fund in accordance with Section 8.01 and (iii) the first Business Day
following the first Distribution Date following the conveyance of the last
Subsequent Mortgage Loan to the Trustee for Loan Group II, any amount remaining
on deposit in the Group II Interest Coverage Account after distributions
pursuant to Sections 6.13(b) above shall be withdrawn by the Trustee and paid to
the Company.
77
83
ARTICLE VII
DEFAULT
Section 7.01. Events Of Default. (a) "Event of Default",
wherever used herein, means any one of the following events:
(i) any failure by the Master Servicer to remit to the Trustee
any payment, other than a Servicing Advance, required to be made by the
Master Servicer under the terms of this Agreement which continues
unremedied for five Business Days after the date upon which such
payment was required to be made;
(ii) the failure by the Master Servicer to make any required
Servicing Advance 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, shall have been given to the Master Servicer
by the Trustee or to the Master Servicer and the Trustee by any
Certificateholder or the Certificate Insurer;
(iii) any failure on the part of the Master Servicer duly to
observe or perform in any material respect any other of the covenants
or agreements on the part of the Master Servicer contained in this
Agreement, or the failure of any representation and warranty made
pursuant to Section 3.01 to be true and correct which continues
unremedied for a period of 30 days (or 15 days in the case of a failure
to pay the premium for any insurance policy which is required to be
maintained under this Agreement) after the date on which written notice
of such failure, requiring the same to be remedied, shall have been
given to the Master Servicer by the Company or the Trustee or to the
Master Servicer and the Trustee by any Certificateholder or the
Certificate Insurer;
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction in an involuntary case under any present
or future federal or state bankruptcy, insolvency or similar law or for
the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Master Servicer and such
decree or order shall have remained in force, undischarged or unstayed
for a period of 60 days;
(v) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Master Servicer or of or relating to all or
substantially all of the Master Servicer's property;
(vi) the Master Servicer shall admit in writing its inability
to pay its debts as they become due, file a petition to take advantage
of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations;
(vii) on any Distribution Date the average Sixty-Day
Delinquency Ratio, for each of the three (or one or two, in the case of
the first and second Distribution Dates) immediately preceding Due
Periods, exceeds ____%. The "Sixty-Day Delinquency Ratio" with respect
to any
78
84
Distribution Date means a fraction, expressed as a percentage, (a) the
numerator of which is the aggregate Principal Balances of all Mortgage
Loans that are 60 or more days Delinquent, in foreclosure or converted
to REO Property as of the last day of the related Due Period and (b)
the denominator of which is the Pool Principal Balance as of the last
day of the related Due Period;
(viii) if on any Distribution Date occurring in August of any
year, commencing in __________________ 199___, the 12 Month Loss Amount
exceeds _______% of the average Pool Principal Balance as of the close
of business on the last day of each of the twelve preceding Due
Periods; or
(ix) if (a) on any Distribution Date occurring before
________________, 199___, the aggregate Liquidated Loan Losses since
the Cut-off Date exceed _____% of the Original Pool Principal Balance,
(b) on any Distribution Date on or after _________________, 199_ and
before _________________, 199___, the aggregate Liquidated Loan Losses
since the Cut-off Date exceed _______% of the Original Pool Principal
Balance, (c) on any Distribution Date on or after _________________,
199___ and before ______________, 200___, the aggregate Liquidated Loan
Losses since the Cut-off Date exceed ______% of the Original Pool
Principal Balance, (d) on any Distribution Date on or after
_____________, 200___ and before ___________________, 200___, the
aggregate Liquidated Loan Losses since the Cut-off Date exceed ____% of
the Original Pool Principal Balance, or (e) on any Distribution Date on
or after _______________, 200____, the aggregate Liquidated Loan Losses
since the Cut-off Date exceed _______% of the Original Pool Principal
Balance.
(b) If an Event of Default described in this Section shall
occur, then, and in each and every such case, so long as such Event of Default
shall not have been remedied: with respect to clauses (i), (ii), (iii), (iv),
(v) and (vi) above, the Trustee shall, but only at the direction of the
Certificate Insurer or the Majority Certificateholders and with the prior
written consent of the Certificate Insurer, by notice in writing to the Master
Servicer and a Responsible Officer of the Trustee, and in addition to whatever
rights such Certificateholders may have at law or equity to damages, including
injunctive relief and specific performance, terminate all the rights and
obligations of the Master Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof, as servicer; and with respect to
clauses (vii)-(ix) above, the Trustee shall, but only at the direction of the
Certificate Insurer, after notice in writing to the Master Servicer and a
Responsible Officer of the Trustee, terminate all the rights and obligations of
the Master Servicer under this Agreement and in and to the Mortgage Loans and
the proceeds thereof, as servicer. Upon receipt by the Master Servicer of such
written notice, all authority and power of the Master Servicer under this
Agreement, whether with respect to the Mortgage Loans or otherwise, shall,
subject to Section 7.02, pass to and be vested in the Trustee, or its designee
approved by the Certificate Insurer, and the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, at the expense of the Master Servicer, any and
all documents and other instruments and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including, but not limited to, the transfer and endorsement or
assignment of the Mortgage Loans and related documents. The Master Servicer
agrees to cooperate with the Trustee in effecting the termination of the Master
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the Trustee or its designee for administration by it of all
amounts which shall at the time be credited by the Master Servicer to the
Collection Account or thereafter received with respect to the Mortgage Loans.
The Trustee shall promptly notify the Certificate Insurer and the Rating
Agencies of the occurrence of an Event of Default.
Section 7.02. Trustee To Act; Appointment Of Successor. (a) On
and after the time the Master Servicer receives a notice of termination pursuant
to Section 7.01, or the Trustee receives the
79
85
resignation of the Master Servicer evidenced by an Opinion of Counsel pursuant
to Section 5.24, or the Master Servicer is removed as Master Servicer pursuant
to Article VII, in which event the Trustee shall promptly notify the Rating
Agencies, except as otherwise provided in Section 7.01, the Trustee shall be the
successor in all respects to the Master Servicer in its capacity as master
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 Master Servicer by the terms and provisions
hereof arising on or after the date of succession; provided, however, that the
Trustee shall not be liable for any actions or the representations and
warranties of any master servicer prior to it and including, without limitation,
the obligations of the Master Servicer set forth in Sections 2.04 and 3.03. The
Trustee, as successor master servicer, shall be obligated to pay Compensating
Interest pursuant to Section 6.09 in any event and to make advances pursuant to
Section 5.21 unless, and only to the extent the Trustee as successor master
servicer determines reasonably and in good faith that such advances would not be
recoverable pursuant to Sections 5.04(b), 5.04(g) or 5.04(j), such determination
to be evidenced by a certification of a Responsible Officer of the Trustee, as
successor master servicer delivered to the Certificate Insurer.
(b) Notwithstanding the above, the Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act or if the Majority
Certificateholders with the consent of the Certificate Insurer or the
Certificate Insurer so requests in writing to the Trustee, appoint, pursuant to
the provisions set forth in paragraph (c) below, or petition a court of
competent jurisdiction to appoint, any established mortgage loan servicing
institution acceptable to the Certificate Insurer that has a net worth of not
less than $[15,000,000] as the successor to the Master Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Master Servicer hereunder.
(c) In the event the Trustee is the successor master servicer,
it shall be entitled to Servicing Compensation (including the Servicing Fee as
adjusted pursuant to the definition thereof) and other funds pursuant to Section
5.14 hereof as the Master Servicer. In the event the Trustee is unable or
unwilling to act as successor master servicer, the Trustee shall solicit, by
public announcement, bids from housing and home finance institutions, banks and
mortgage servicing institutions meeting the qualifications set forth above. Such
public announcement shall specify that the successor master servicer shall be
entitled to the full amount of the aggregate Servicing Fees hereunder as
servicing compensation, together with the other Servicing Compensation. Within
thirty days after any such public announcement, the Trustee shall negotiate and
effect the sale, transfer and assignment of the servicing rights and
responsibilities hereunder to the qualified party submitting the highest
qualifying bid. The Trustee shall deduct from any sum received by the Trustee
from the successor to the Master Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder
and the amount of any unreimbursed Servicing Advances and Periodic Advances owed
to the Trustee. After such deductions, the remainder of such sum shall be paid
by the Trustee to the Master Servicer at the time of such sale, transfer and
assignment to the Master Servicer's successor.
(d) The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Master Servicer agrees to cooperate with the Trustee and any
successor master servicer in effecting the termination of the Master Servicer's
servicing responsibilities and rights hereunder and shall promptly provide the
Trustee or such successor master servicer, as applicable, at the Master
Servicer's cost and expense, all documents and records reasonably requested by
it to enable it to assume the Master Servicer's functions hereunder and shall
promptly also transfer to the Trustee or such successor master servicer, as
applicable, all amounts that then have been or should have been deposited in the
Collection Account by the Master Servicer or that are thereafter received with
respect to the Mortgage Loans. Any collections received by the Master Servicer
after such removal or resignation shall be endorsed by it to the Trustee and
remitted directly to
80
86
the Trustee or, at the direction of the Trustee, to the successor master
servicer. Neither the Trustee nor any other successor master servicer shall be
held liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Master 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 Master Servicer hereunder. No appointment of a successor
to the Master Servicer hereunder shall be effective until the Trustee and the
Certificate Insurer shall have consented in writing thereto, and written notice
of such proposed appointment shall have been provided by the Trustee to the
Certificate Insurer and to each Certificateholder. The Trustee shall not resign
as servicer until a successor master servicer reasonably acceptable to the
Certificate Insurer has been appointed.
(e) Pending appointment of a successor to the Master Servicer
hereunder, the Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; PROVIDED, HOWEVER, that no such
compensation shall be in excess of that permitted the Master Servicer pursuant
to Section 5.14, together with other Servicing Compensation. The Master
Servicer, the Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
Section 7.03. Waiver Of Defaults. The Majority
Certificateholders may, on behalf of all Certificateholders, and subject to the
consent of the Certificate Insurer (so long as no Certificate Insurer Default
has occurred and is continuing), waive any events permitting removal of the
Master Servicer as servicer pursuant to this Article VII; provided, however,
that the Majority Certificateholders may not waive a default in making a
required distribution on a Certificate without the consent of the holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Trustee to the Rating Agencies.
Section 7.04. Mortgage Loans, Trust Fund And Accounts Held For
Benefit OF The Certificate Insurer. (a) The Trustee shall hold the Trust Fund
and the Mortgage Files for the benefit of the Certificateholders and the
Certificate Insurer and all references in this Agreement and in the Certificates
to the benefit of Holders of the Certificates shall be deemed to include the
Certificate Insurer. Unless a Certificate Insurer Default has occurred and is
continuing, the Trustee shall cooperate in all reasonable respects with any
reasonable request by the Certificate Insurer for action to preserve or enforce
the Certificate Insurer's rights or interests under this Agreement and the
Certificates unless, as stated in an Opinion of Counsel addressed to the Trustee
and the Certificate Insurer (which Opinion of Counsel shall not be an expense of
the Trustee or the Trust Fund), such action is adverse to the interests of the
Certificateholders or diminishes the rights of the Certificateholders or imposes
additional burdens or restrictions on the Certificateholders.
(b) The Master Servicer hereby acknowledges and agrees that it
shall service the Mortgage Loans for the benefit of the Certificateholders and
for the benefit of the Certificate Insurer, and all references in this Agreement
to the benefit of or actions on behalf of the Certificateholders shall be deemed
to include the Certificate Insurer.
81
87
ARTICLE VIII
TERMINATION
Section 8.01. Termination. (a) Subject to Section 8.02, this
Agreement shall terminate upon notice to the Trustee of either: (i) the
disposition of all funds with respect to the last Mortgage Loan and the
remittance of all funds due hereunder and the payment of all amounts due and
payable to the Certificate Insurer and the Trustee or (ii) mutual consent of the
Master Servicer, the Certificate Insurer and all Certificateholders in writing;
PROVIDED, HOWEVER, that in no event shall the Trust established by this
Agreement terminate later than twenty-one years after the death of the last
surviving lineal descendant of Xxxxxx X. Xxxxxxx, late Ambassador of the United
States to the Court of St. James's, alive as of the date hereof.
(b) In addition, subject to Section 8.02, the Holder of a
50.01% Percentage Interest or greater of the Class R Certificates or the Master
Servicer (or the Certificate Insurer, if [_________________________________] is
removed as Master Servicer) may, at its option and at its sole cost and expense,
terminate this Agreement on any date on which the related Pool Principal Balance
is less than [10]%, if the holder of the Class R Certificates exercises this
option, or is less than [5]%, if the Master Servicer or the Certificate Insurer
exercises this option, of the sum of (x) the aggregate of the Principal Balances
of the Mortgage Loans on the Cut-off Date plus (y) the aggregate of the
Principal Balances of the Subsequent Mortgage Loans on their respective
Subsequent Cut-off Dates, by purchasing, on the next succeeding Distribution
Date, all of the outstanding Mortgage Loans and REO Properties at a price (the
"Termination Price") equal to the sum of (i) 100% of the Principal Balance of
each such outstanding Mortgage Loan and each REO Property; (ii) the aggregate
amount of accrued and unpaid interest on such Mortgage Loans through the related
due period and 30 days' interest on such Mortgage Loans at a rate equal to the
related Mortgage Interest Rate (net of the Servicing Fee if the Master Servicer
exercises this option) with respect to such Mortgage Loan; (iii) any
unreimbursed amounts due to the Certificate Insurer under this Agreement or the
Insurance Agreement; (iv) the amount of any unpaid Servicing Fees and
unreimbursed Servicing Advances made by the Master Servicer with respect to the
related Mortgage Loans; (v) any excess of the actual stated principal balance of
each such Mortgage Loan and REO Property over the Principal Balance thereof, the
aggregate amount of accrued and unpaid interest on such excess through the
related due period and 30 days' interest on such excess at a rate equal to the
related Mortgage Interest Rate with respect to each related Mortgage Loan; and
(vi) the amount of any unpaid Servicing Fees, unreimbursed Servicing Advances
and unreimbursed Periodic Advances not included in clauses (i) to (v) above. Any
such purchase shall be accomplished by deposit into the related Certificate
Account of the Termination Price. From the Termination Price so deposited, the
Trustee shall reimburse the Master Servicer for the amount of any unpaid
Servicing Fees, unreimbursed Periodic Advances and unreimbursed Servicing
Advances made by the Master Servicer with respect to the related Mortgage Loans.
No such termination is permitted without the prior written consent of the
Certificate Insurer (i) if it would result in a draw on the Certificate
Insurance Policy or (ii) unless the Master Servicer shall have delivered to the
Certificate Insurer an opinion of counsel reasonably satisfactory to the
Certificate Insurer stating that no amounts paid hereunder are subject to
recapture as preferential transfers under the United States Bankruptcy Code, 11
U.S.C. xx.xx. 101 ET SEQ., as amended.
(c) If on any Distribution Date, the Master Servicer
determines that there are no outstanding Mortgage Loans and no other funds or
assets in the Trust Fund other than funds in the related Certificate Account,
the Master Servicer shall notify the Trustee and the Trustee shall send a final
distribution notice promptly to the related Certificateholders in accordance
with paragraph (d) below.
82
88
(d) Notice of any termination, specifying the Distribution
Date upon which the Trust Fund will terminate and that the Certificateholders
shall surrender their Certificates to the Trustee for payment of the final
distribution and cancellation, shall be given promptly by the Trustee by letter
to the Certificateholders mailed during the month of such final distribution
before the Master Servicer Remittance Date in such month, specifying (i) the
Distribution Date upon which final payment of the Certificates will be made upon
presentation and surrender of the Certificates at the office of the Trustee
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Certificates at
the office of the Trustee therein specified. The obligations of the Certificate
Insurer hereunder shall terminate upon the deposit by the Master Servicer with
the Trustee of a sum sufficient to purchase all of the Mortgage Loans and REO
Properties in the Trust Fund as set forth above and when the aggregate
Certificate Principal Balance of the Certificates has been reduced to zero.
(e) In the event that all Certificateholders do not surrender
their Certificates for cancellation within six months after the time specified
in the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice, all of the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within nine months after the second notice all the Certificates shall
not have been surrendered for cancellation, the Class R Certificateholders shall
be entitled to all unclaimed funds and other assets which remain subject hereto
and the Trustee upon transfer of such funds shall be discharged of any
responsibility for such funds and the Certificateholders shall look only to such
Class R Certificateholders for payment. Such funds shall remain uninvested.
Section 8.02. Additional Termination Requirements. (a) In the
event that the Holder of a 50.01% Percentage Interest or greater of the Class R
Certificates, Master Servicer or Certificate Insurer (any of which, an
"Exercising Party") exercises its purchase option with respect to the Trust Fund
as provided in Section 8.01, the Trust Fund shall be terminated in accordance
with the following additional requirements, unless the Trustee has been
furnished with an Opinion of Counsel (which Opinion of Counsel shall not be an
expense of the Trustee or the Trust Fund) to the effect that the failure of the
Trust Fund to comply with the requirements of this Section 8.02 will not (i)
result in the imposition of taxes on "prohibited transactions" of the Trust Fund
as defined in Section 860F of the Code or (ii) cause the Trust Fund to fail to
qualify as a REMIC at any time that any Class A Certificates or Class S
Certificates are outstanding:
(i) The Trustee shall establish a 90-day liquidation period
for the Trust Fund and specify the first day of such period in a
statement attached to the Trust Fund's final Tax Return pursuant to
Treasury Regulation Section 1.860F-1. The Trustee shall satisfy all the
requirements of a qualified liquidation under Section 860F of the Code
and any regulations thereunder, as evidenced by an Opinion of Counsel
obtained at the expense of the Exercising Party;
(ii) During such 90-day liquidation period, and at or prior to
the time of making of the final payment on the Certificates, the
Trustee shall sell all of the assets of the Trust Fund for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Holders of the Class R
83
89
Certificates all cash on hand in the Trust Fund (other than cash
retained to meet claims), and the REMIC shall terminate at that time.
(b) By their acceptance of the Class R Certificates, the
Holders thereof hereby agree to authorize the Trustee to specify the 90-day
liquidation period for the Trust Fund, which authorization shall be binding upon
all successor Class R Certificateholders.
Section 8.03. Accounting Upon Termination Of Master Servicer.
Upon termination of the Master Servicer, the Master Servicer shall, at its
expense:
(a) deliver to its successor or, if none shall yet have been
appointed, to the Trustee, the funds in any Account;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Trustee all of the Mortgage Files and related documents and
statements held by it hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Trustee and, upon request, to the Certificateholders a full
accounting of all funds, including a statement showing the Monthly Payments
collected by it and a statement of monies held in trust by it for the payments
or charges with respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Mortgage Loans to its successor and to more fully and
definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the "Master Servicer" under
this Agreement.
ARTICLE IX
CONCERNING THE TRUSTEE
Section 9.01. Duties Of Trustee. The Trustee, prior to the
occurrence of an Event of Default and after the curing of all Events of Default
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. If an Event of Default occurs
and is continuing, the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs. Any permissive right of the Trustee
enumerated in this Agreement shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement; provided, however,
that the Trustee shall not be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished by the Master Servicer or the Seller hereunder. If any such
instrument is found not to conform to the requirements of this Agreement in a
material manner, the Trustee shall take action as it deems appropriate to have
the instrument corrected and will provide notice thereof to the Certificate
Insurer.
84
90
The Trustee shall sign on behalf of the Trust Fund any tax
return that the Trustee is required to sign pursuant to applicable federal,
state or local tax laws.
The Trustee covenants and agrees that it shall perform its
obligations hereunder in a manner so as to maintain the status of the Trust Fund
as a REMIC under the REMIC Provisions and to prevent the imposition of any
federal, state or local income, prohibited transaction, contribution or other
tax on the Trust Fund to the extent that maintaining such status and avoiding
such taxes are reasonably within the control of the Trustee and are reasonably
within the scope of its duties under this Agreement.
No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default,
and after the curing of all such Events of Default which may
have occurred, the duties and obligations of the Trustee shall
be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement;
(ii) The Trustee shall not be personally liable for
an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining
the pertinent facts;
(iii) The Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken
by it in good faith in accordance with the direction of the
Certificate Insurer relating to the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement; and
(iv) The Trustee shall not be charged with knowledge
of any failure by the Master Servicer to comply with any of
its obligations hereunder, or any breaches of representations
or warranties under the Purchase Agreement unless a
Responsible Officer of the Trustee obtains actual knowledge of
such failure or breach or the Trustee receives written notice
of such failure or breach from the Master Servicer, the
Company, the Seller or the Certificate Insurer.
The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Company or the Master Servicer under this Agreement,
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the Master Servicer
pursuant to Section 7.02 of this Agreement.
85
91
Section 9.02. Certain Matters Affecting The Trustee. Except as
otherwise provided in Section 9.01:
(a) The Trustee may request and rely upon and shall
be protected in acting or refraining from acting upon any
resolution, Officers' Certificate, Opinion of Counsel,
certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to
be genuine and to have been signed or presented by the proper
party or parties;
(b) The Trustee may consult with counsel and any
Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance
therewith;
(c) The Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this
Agreement or to make any investigation of matters arising
hereunder or to institute, conduct or defend any litigation
hereunder or in relation hereto at the request, order or
direction of any of the Certificateholders or the Certificate
Insurer, pursuant to the provisions of this Agreement, unless
such Certificateholders or the Certificate Insurer, as the
case may be, shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; nothing
contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default (which
has not been cured), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of
care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such
person's own affairs;
(d) The Trustee shall not be personally liable for
any action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement;
(e) Prior to the occurrence of an Event of Default
hereunder and after the curing of all Events of Default which
may have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so
by the Certificate Insurer or by at least a 25% Percentage
Interest of any Class of Class A Certificates; provided,
however, that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee
by the Certificate Insurer or such Certificateholders, as the
case may be, the Trustee may require reasonable indemnity
against such expense, or liability from such
Certificateholders or the Certificate Insurer, as the case may
be, as a condition to taking any such action;
(f) The Trustee shall not be accountable, shall have
no liability and makes no representation as to any acts or
omissions hereunder of the Master Servicer until such time as
the Trustee may be required to act as Master Servicer pursuant
to Section 7.02 and thereupon only for the acts or omissions
of the Trustee as successor Master Servicer;
(g) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys;
86
92
(h) The right of the Trustee to perform any
discretionary act enumerated in this Agreement shall not be
construed as a duty, and the Trustee shall not be answerable
for other than its negligence or willful misconduct in the
performance of such act; and
(i) The Trustee shall not be required to give any
bond or surety in respect of the execution of the trust
created hereby or the powers granted hereunder.
Section 9.03. Trustee Not Liable For Certificates or Mortgage
Loans. The recitals contained herein and in the Certificates, other than the
signature of the Trustee on the Certificates and the certificate of
authentication, shall be taken as the statements of the Company or the Master
Servicer, as the case may be, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations or warranties as to the
validity or sufficiency of this Agreement or of the Certificates or of any
Mortgage Loan or related document, other than the signature of the Trustee on
the Certificates and the Certificate of Authentication. The Trustee shall not be
accountable for the use or application by the Company or the Master Servicer of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Seller in respect of the Mortgage Loans
or deposited in or withdrawn from the Custodial Account or the Certificate
Accounts or any other account by or on behalf of the Company or the Master
Servicer, other than any funds held by or on behalf of the Trustee in accordance
with Section 6.01.
Except in connection with its duties pursuant to Section 7.02
of this Agreement, and as otherwise specifically provided in this Agreement, the
Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity and enforceability of any Mortgage or any
Mortgage Loan, or the perfection and priority of any mortgage or the maintenance
of any such perfection and priority or with respect to the sufficiency of the
Trust Fund, including, without limitation: the existence, condition and
ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon; the validity of the assignment of any Mortgage Loan to
the Trustee or of any intervening assignment; the performance or enforcement of
any Mortgage Loan; the compliance by the Seller, the Company or the Master
Servicer with any warranty or representation made under this Agreement or in any
related document or the accuracy of any such warranty or representation; any
investment of monies by or at the direction of the Company or the Master
Servicer or any loss resulting therefrom (unless the Trustee is the obligor
thereon); the acts or omissions of any of the Seller, the Company, the Master
Servicer, any subservicer or any Mortgagor; any action of the Master Servicer or
any subservicer taken in the name of the Trustee; the failure of the Master
Servicer or any subservicer to act or perform any duties acquired of it as agent
of the Trustee hereunder; or any action by the Trustee taken at the instruction
of the Master Servicer or the Certificate Insurer. The Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or to other perfect or maintain the perfection of any
security interest or lien granted to it hereunder unless directed by the
Company.
Section 9.04. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Trustee and may transact any
banking or trust business with the Company, the Master Servicer or any of their
respective Affiliates.
Section 9.05. Payment Of Trustee's Fees. The Trustee shall
withdraw from each of the Group I and Group II Certificate Accounts on each
Distribution Date and pay to itself the Trustee's Fee. Except as otherwise
provided in this Agreement, the Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Trust Fund and held harmless
against any loss, liability, claims and expenses (including reasonable
attorneys' fees) in connection with any Event of
87
93
Default, any breach of this Agreement or any claim or legal action (including
any pending or threatened claim or legal action) relating to the acceptance or
administration of its trusts hereunder or the Certificates, or its performance
under the Insurance Agreement, other than any loss, liability or expense
incurred by reason of the Trustee's willful misfeasance, bad faith or negligence
in the performance of its duties hereunder or under the Insurance Agreement or
by reason of the Trustee's reckless disregard of obligations and duties
hereunder or under the Insurance Agreement. All such amounts shall be payable
from funds in the Certificate Accounts as provided in Section 6.02(e). The
provisions of this Section 9.05 shall survive the termination of this Agreement
and the removal or resignation of the Trustee.
The Master Servicer covenants and agrees to indemnify the
Trustee and any director, officer, employee or agent of the Trustee against any
losses, liabilities, damages, claims or expenses (including reasonable legal
fees and such related expenses) that may be sustained by the Trustee in
connection with this Agreement related to the willful misfeasance, bad faith or
gross negligence in the performance of the Master Servicer's duties hereunder.
Section 9.06. Eligibility Requirements For Trustee. The
Trustee hereunder shall at all times be a corporation or a national banking
association organized and doing business under the laws of any state or the
United States of America or the District of Columbia, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 and a long-term secured debt rating of at least "Baa" if
Xxxxx'x is one of the Rating Agencies and subject to supervision or examination
by federal or state authority. In addition, the Trustee shall at all times be
acceptable to the Rating Agencies rating the Certificates. If such corporation
or bank publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section the combined capital and surplus of such
corporation or bank shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section , the Trustee shall resign immediately in the manner and with the
effect specified in Section 9.07. The corporation or national banking
association serving as Trustee may have normal banking and trust relationships
with the Seller and their affiliates or the Master Servicer and its affiliates;
provided, however, that such corporation or bank cannot be an affiliate of the
Master Servicer other than the Trustee in its role as successor to the Master
Servicer.
Section 9.07. Resignation and Removal of The Trustee. The
Trustee may at any time resign and be discharged from the trusts hereby created
by giving notice thereof to the Company, the Certificate Insurer, the Master
Servicer and to all Certificateholders; provided, that such resignation shall
not be effective until a successor trustee is appointed and accepts appointment
in accordance with the following provisions. Upon receiving such notice of
resignation, the Master Servicer shall, with the written consent of the
Certificate Insurer, promptly appoint a successor trustee who meets the
eligibility requirements of Section 9.06 by written instrument, in duplicate,
which instrument shall be delivered to the resigning Trustee and to the
successor trustee. A copy of such instrument shall be delivered to the
Certificateholders, the Certificate Insurer and the Master Servicer by the
Company. If no successor trustee shall have been so appointed and have accepted
appointment within 60 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee; provided, however, that the resigning
Trustee shall not resign and be discharged from the trusts hereby created until
such time as the Rating Agency rating the Certificates approves the successor
trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.06 and shall fail to resign after
written request therefor by the Master Servicer or the Certificate Insurer, or
if at any time the Trustee shall become incapable of acting, or shall be
adjudged bankrupt or
88
94
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, or if the rating of the long-term debt obligations of the Trustee
is not acceptable to the Rating Agencies in respect of mortgage pass-through
certificates having a rating equal to the then current rating on the
Certificates, then the Master Servicer, with the written consent of the
Certificate Insurer, may remove the Trustee and appoint a successor trustee who
meets the eligibility requirements of Section 9.06 by written instrument, in
duplicate, which instrument shall be delivered to the Trustee so removed and to
the successor trustee. A copy of such instrument shall be delivered to the
Certificateholders, the Certificate Insurer and the Company by the Master
Servicer.
The Majority Certificateholders, with the written consent of
the Certificate Insurer, may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments, in triplicate, signed by
the Certificate Insurer or such Holders or their attorneys-in-fact duly
authorized, one complete set of which instruments shall be delivered to the
Master Servicer, one complete set to the Trustee so removed and one complete set
to the successor so appointed. A copy of such instrument shall be delivered to
the Certificateholders, the Certificate Insurer and the Company by the Master
Servicer.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 9.08.
Section 9.08. Successor Trustee. Any successor trustee
appointed as provided in Section 9.07 shall execute, acknowledge and deliver to
the Master Servicer, the Certificate Insurer and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with the like effect as if originally named as trustee herein. The
predecessor trustee shall deliver to the successor trustee all of the Mortgage
Files and related documents and statements held by it hereunder, and the Master
Servicer and the predecessor trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee all such rights,
powers, duties and obligations.
No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor trustee as
provided in this Section , the Master Servicer shall mail notice of the
succession of such trustee hereunder to the Certificate Insurer and all Holders
of Certificates at their addresses as shown in the Certificate Register provided
that the Master Servicer has received such Certificate Register. If the Master
Servicer fails to mail such notice within ten days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Master Servicer.
Notwithstanding anything to the contrary contained herein, so
long as no Certificate Insurer Default exists, the appointment of any successor
trustee pursuant to any provision of this Agreement will be subject to the prior
written consent of the Certificate Insurer.
Section 9.09. Merger or Consolidation of Trustee. Any
corporation into which the Trustee may be merged or converted or with which it
may be consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
89
95
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be eligible under the provisions of
Section 9.06, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 9.10. Appointment Of Co-Trustee Or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the Company
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee or co-trustees, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust Fund, and to vest
in such Person or Persons, in such capacity, such title to the Trust Fund, or
any part thereof, and, subject to the other provisions of this Section 9.10,
such powers, duties, obligations, rights and trusts as the Company and the
Trustee may consider necessary or desirable. If the Company shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in case an Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 9.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 9.08 hereof.
In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 9.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Master Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee. No trustee
hereunder shall be held personally liable by reason of any act or omission of
any other trustee hereunder. The Company and the Trustee may each at any time
accept the resignation of or remove any separate trustee or co-trustee except
that following the occurrence of an Event of Default, the Trustee acting along
may accept the resignation or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article IX. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
90
96
Section 9.11. Limitation of Liability.
The Certificates are executed and authenticated by the
Trustee, not in its individual capacity but solely as Trustee of the Trust Fund
created by this Agreement, in the exercise of the powers and authority conferred
and vested in it by this Agreement. Each of the undertakings and agreements made
on the part of the Trustee in the Certificates is made and intended not as a
personal undertaking or agreement by the Trustee but is made and intended for
the purpose of binding only the Trust Fund.
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates.
All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursement and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders and the Certificate Insurer in
respect of which such judgment has been recovered.
Section 9.13. Suits For Enforcements.
In case an Event of Default or other default by the Master
Servicer or the Company hereunder, any Certificate Insurer Default or other
default by the Certificate Insurer hereunder or under the Certificate Insurance
Policy shall occur and be continuing, the Trustee, in its discretion, may
proceed to protect and enforce its rights and the rights of the Holders of
Certificates under this Agreement by a suit, action or proceeding in equity or
at law or otherwise, whether for the specific performance of any covenant or
agreement contained in this Agreement or the Certificate Insurance Policy or in
aid of the execution of any power granted in this Agreement or for the
enforcement of any other legal, equitable or other remedy, as the Trustee, being
advised by counsel (the advice of such counsel being an expense of the Trustee),
shall deem most effectual to protect and enforce any of the rights of the
Trustee and the Certificateholders.
Section 9.14. Waiver Of Inventory, Accounting And Appraisal
Requirements.
The Trustee shall be relieved of, and each Certificateholder
hereby waives, any requirement of any jurisdiction in which the Trust Fund, or
any part thereof, may be located that the Trustee file any inventory, accounting
of appraisal of the Trust Fund with any court, agency or body at any time or in
any manner whatsoever.
ARTICLE X
REMIC PROVISIONS
Section 10.01. Remic Administration.
(a) The Trustee shall make an election to treat the Trust Fund
(exclusive of the Interest Coverage Accounts and the Pre-Funding Accounts) as a
REMIC under the Code, and if necessary, under applicable state law. Such
election will be made on Form 1066 or other appropriate federal tax or
information return or any appropriate state return for the taxable year ending
on the last day of the calendar year in which the Certificates are issued. For
purposes of the REMIC election in
91
97
respect of the Trust Fund, (i) the Certificates (other than the Class R
Certificates) shall be designated as the "regular interests" and (ii) the Class
R Certificates shall be designated as the sole Class of "residual interest" in
the REMIC. The Trustee shall not permit the creation of any "interests" in the
Trust Fund (within the meaning of Section 860G of the Code) other than the REMIC
regular interests and the interests represented by the Certificates.
(b) The Closing Date is hereby designated as the Startup Day
of the Trust Fund within the meaning of Section 860G(a)(9) of the Code.
(c) The Trustee shall pay out of its own funds, without any
right of reimbursement, any and all expenses relating to any tax audit of the
Trust Fund (including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect thereto that involved the
Internal Revenue Service or state tax authorities), other than the expense of
obtaining any tax related Opinion of Counsel not obtained in connection with
such an audit and other than taxes, in either case except as specified herein;
provided, however, that if such audit resulted from the negligence of the Master
Servicer or the Company, then the Master Servicer or the Company, as the case
may be, shall pay such expenses. The Trustee, as agent for the tax matters
person, shall (i) act on behalf of the Trust Fund in relation to any tax matter
or controversy involving the Trust Fund and (ii) represent the Trust Fund in any
administrative or judicial proceeding relating to an examination or audit by any
governmental taxing authority with respect thereto. The Holder of the largest
Percentage Interest in the Class R Certificates from time to time is hereby
designated as Tax Matters Person with respect to the Trust Fund and hereby
irrevocably appoints and authorizes the Trustee to act its agent to perform the
duties of the Tax Matters Person with respect to the Trust Fund. To the extent
authorized under the Code and the regulations promulgated thereunder, each
Holder of a Class R Certificate hereby irrevocably appoints and authorizes the
Trustee to be its attorney-in-fact for purposes of signing any Tax Returns
required to be filed on behalf of the Trust Fund.
(d) The Trustee shall prepare or cause to be prepared, sign
and file all of the Tax Returns in respect of the Trust Fund created hereunder,
other than Tax Returns required to be filed by the Master Servicer pursuant to
Section 5.25. The expenses of preparing and filing such returns shall be borne
by the Trustee without any right of reimbursement therefor.
(e) The Trustee shall perform on behalf of the Trust Fund all
reporting and other tax compliance duties that are the responsibility of the
Trust Fund under the Code, REMIC Provisions or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, as required by the Code, the REMIC Provisions or other such
compliance guidance, the Trustee shall provide (i) to any Transferor of a Class
R Certificate such information as is necessary for the application of any tax
relating to the transfer of a Class R Certificate to any Person who is not a
Disqualified Organization, (ii) to Certificateholders such information or
reports as are required by the Code or the REMIC Provisions including reports
relating to interest, original issue discount and market discount or premium
(using the Prepayment Assumption) and (iii) to the Internal Revenue Service the
name, title, address and telephone number of the person who will serve as the
representative of the Trust Fund. In addition, the Company shall provide or
cause to be provided to the Trustee, within ten (10) days after the Closing
Date, all information or data that the Trustee reasonably determines to be
relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.
(f) The Trustee shall take such action and shall cause the
Trust Fund created hereunder to take such action as shall be necessary to create
or maintain the status thereof as a REMIC under the REMIC Provisions (and the
Master Servicer shall assist it, to the extent reasonably requested
92
98
by it). The Trustee shall not take any action, cause the Trust Fund to take any
action or fail to take (or fail to cause to be taken) any action that, under the
REMIC Provisions, if taken or not taken, as the case may be, could (i) endanger
the status of the Trust Fund as a REMIC or (ii) result in the imposition of a
tax upon the Trust Fund (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code) (either such
event, an "Adverse REMIC Event") unless the Trustee received an Opinion of
Counsel (at the expense of the party seeking to take such action but in no event
shall such Opinion of Counsel be an expense of the Trustee) to the effect that
the contemplated action will not, with respect to the Trust Fund created
hereunder, endanger such status or result in the imposition of such a tax. The
Master Servicer shall not take or fail to take any action (whether or not
authorized hereunder) as to which the Trustee has advised it in writing that it
has received an Opinion of Counsel (which such Opinion of Counsel shall not be
an expense of the Trustee) to the effect that an Adverse REMIC Event could occur
with respect to such action. In addition, prior to taking any action with
respect to the Trust Fund or its assets, or causing the Trust Fund to take any
action which is not expressly permitted under the terms of this Agreement, the
Master Servicer will consult with the Trustee or its designee, in writing, with
respect to whether such action could cause an Adverse REMIC Event to occur with
respect to the Trust Fund, and the Master Servicer shall not take any such
action or cause the Trust Fund to take any such action as to which the Trustee
has advised it in writing that an Adverse REMIC Event could occur. The Trustee
may consult with counsel to make such written advice, and the cost of same shall
be borne by the party seeking to take the action not permitted by this Agreement
(but in no event shall such cost be an expense of the Trustee). At all times as
may be required by the Code, the Trustee will, to the extent reasonably within
the control of the Trustee and reasonably within the scope of the Trustee's
duties hereunder, ensure that substantially all of the assets of the Trust Fund
will consist of "qualified mortgages" as defined in Section 860G(a)(3) of the
Code and "permitted investments" as defined in Section 860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited
transactions" of the Trust Fund created hereunder as defined in Section
860F(a)(2) of the Code on "net income from foreclosure property" of the Trust
Fund as defined in Section 860G(c) of the Code, on any contributions to the
Trust Fund after the Startup Day therefor pursuant to Section 860G(d) of the
Code, or any other tax is imposed by the Code or any applicable provisions of
state or local tax laws, such tax shall be charged (i) to the Trustee pursuant
to Section 10.03 hereof, if such tax arises out of or results from a breach by
the Trustee of any of its obligations under this Article X, (ii) to the Master
Servicer pursuant to Section 10.03 hereof, if such tax arises out of or results
from a breach by the Master Servicer of any of its obligations under Article V
or this Article X, or otherwise (iii) against amounts on deposit in the related
Certificate Account and shall be paid by withdrawal therefrom.
(h) On or before ___________ of each calendar year, commencing
_________, 199_, the Trustee shall deliver to the Master Servicer and each
Rating Agency a Certificate from a Responsible Officer of the Trustee stating
the Trustee's compliance with this Article X.
(i) The Master Servicer and the Trustee shall, for federal
income tax purposes, maintain books and records with respect to the Trust Fund
on a calendar year and on an accrual basis.
(j) The Trustee shall not accept any contributions of assets
to the Trust Fund, other than acceptance of conveyance of any Subsequent
Mortgage Loan pursuant to Section 2.08, unless it shall have received an Opinion
of Counsel (which such Opinion of Counsel shall not be an expense of the
Trustee) to the effect that the inclusion of such assets in the Trust Fund will
not cause the Trust Fund to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject the Trust Fund to
93
99
any tax under the REMIC Provisions or other applicable provisions of federal,
state and local law or ordinances.
(k) Neither the Trustee nor the Master Servicer shall enter
into any arrangement by which the Trust Fund will receive a fee or other
compensation for services nor permit the Trust Fund to receive any income from
assets other than "qualified mortgages" as defined in Section 860G(a)(3) of the
Code or "permitted investments" as defined in Section 860G(a)(5) of the Code.
(l) Solely for purposes of satisfying Section
1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest possible maturity
date" by which the Certificate Principal Balances of each Class of Certificates
representing a regular interest in the Trust Fund would be reduced to zero is
January 25, 2028, which is the Distribution Date thirteen months following the
latest scheduled maturity of any Group I Loan or Group II Loan, respectively.
(m) Upon filing with the Internal Revenue Service, the Trustee
shall furnish to the Holders of the Class R Certificates the Form 1066 and each
Form 1066Q and shall respond promptly to written requests made not more
frequently than quarterly by any Holder of Class R Certificates with respect to
the following matters:
(1) the original projected principal and interest
cash flows on the Closing Date on the regular and residual
interests created hereunder and on the Mortgage Loans, based
on the Prepayment Assumption;
(2) the projected remaining principal and interest
cash flows as of the end of any calendar quarter with respect
to the regular and residual interests created hereunder and
the Mortgage Loans, based on the Prepayment Assumption;
(3) the Prepayment Assumption and any interest rate
assumptions used in determining the projected principal and
interest cash flows described above;
(4) the original issue discount (or, in the case of
the Mortgage Loans, market discount) or premium accrued or
amortized through the end of such calendar quarter with
respect to the regular or residual interests created hereunder
and with respect to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(5) the treatment of losses realized with respect to
the Mortgage Loans or the regular interests created hereunder,
including the timing and amount of any cancellation of
indebtedness income of the REMIC with respect to such regular
interests or bad debt deductions claimed with respect to the
Mortgage Loans;
(6) the amount and timing of any non-interest
expenses of the REMIC; and
(7) any taxes (including penalties and interest)
imposed on the REMIC, including, without limitation, taxes on
"prohibited transactions," "contributions" or "net income from
foreclosure property" or state or local income or franchise
taxes.
Section 10.02 Prohibited Transactions and ACTIVITIES.
94
100
Neither the Company, the Master Servicer nor the Trustee shall
sell, dispose of or substitute for any of the Mortgage Loans, except in
connection with (i) the foreclosure of a Mortgage Loan, including but not
limited to, the acquisition or sale of a Mortgaged Property acquired by deed in
lieu of foreclosure, (ii) the bankruptcy of the Trust Fund, (iii) the
termination of the Trust Fund pursuant to Article VIII of this Agreement, or
(iv) a purchase of Mortgage Loans pursuant to Article II or III of this
Agreement nor acquire any assets for the Trust Fund, nor sell or dispose of any
investments in the Certificate Accounts for gain, nor accept any contributions
to the Trust Fund after the Closing Date unless it has received an Opinion of
Counsel (at the expense of the party seeking to cause such sale, disposition,
substitution or acquisition but in no event shall such Opinion of Counsel be an
expense of the Trustee) that such sale, disposition, substitution or acquisition
will not (a) affect adversely the status of the Trust Fund as a REMIC or (b)
cause the Trust Fund to be subject to a tax on "prohibited transactions" or
"contributions" pursuant to the REMIC Provisions.
Section 10.03. Master Servicer and Trustee Indemnification.
(bk) The Trustee agrees to indemnify the Trust Fund, the
Company and the Master Servicer for any taxes and costs including, without
limitation, any reasonable attorneys' fees imposed on or incurred by the Trust
Fund, the Company or the Master Servicer, as a result of a breach of the
Trustee's covenants set forth in this Article X.
(bl) The Master Servicer agrees to indemnify the Trust Fund,
the Company and the Trustee for any taxes and costs (including, without
limitation, any reasonable attorneys' fees) imposed on or incurred by the Trust
Fund, the Company or the Trustee, as a result of a breach of the Master
Servicer's covenants set forth in this Article X or in Article V with respect to
compliance with the REMIC Provisions, including without limitation, any
penalties arising from the Trustee's execution of Tax Returns prepared by the
Master Servicer pursuant to Section 5.25 that contain errors or omissions.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Limitation on Liability of The Company and The
Master Servicer. Neither the Company, the Master Servicer nor any of the
directors, officers, employees or agents of the Company or the Master Servicer
shall be under any liability to the Certificate Insurer, the Trust Fund or the
Certificateholders 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 Company or the
Master Servicer (but this provision shall protect the above described persons)
against any breach of warranties or representations made herein, or against any
specific liability imposed on the Master Servicer or the Company pursuant to any
other Section hereof; and provided further that this provision shall not protect
the Company, the Master Servicer or any such person, against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Company, the Master Servicer and any
director, officer, employee or agent of the Company or 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. The Company,
the Master Servicer and any director, officer, employee or agent of the Company
or the Master Servicer shall be indemnified and held harmless by the Trust Fund
against any loss, liability or expense incurred in connection with any legal
action relating to this Agreement or the Certificates, other than any loss,
liability or expense related to Master Servicer's servicing obligations with
respect to any specific
95
101
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) or related to the
Master Servicer's obligations under this Agreement, or any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Company nor the Master Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its respective duties under this Agreement and which
in its opinion may involve it in any expense or liability; provided, however,
that the Company or the Master Servicer may in its sole discretion undertake any
such action which it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In the event the Company or the Master
Servicer take any action as described in the preceding sentence, the legal
expenses and costs of such action, if previously approved in writing by the
Certificate Insurer, which approval shall not be unreasonably withheld, and any
liability resulting therefrom will be expenses, costs and liabilities of the
Trust Fund, and the Master Servicer or the Company, as the case may be, will be
entitled to be reimbursed therefor out of funds in the Collection Account.
Section 11.02. Acts of Certificateholders. (a) Except as
otherwise specifically provided herein, whenever Certificateholder action,
consent or approval is required under this Agreement, such action, consent or
approval shall be deemed to have been taken or given on behalf of, and shall be
binding upon, all Certificateholders if the Majority Certificateholders or the
Certificate Insurer agrees to take such action or give such consent or approval.
(b) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heir to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(c) "Cerficateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
Section 11.03. Amendment. This Agreement may be amended from
time to time by the Company, the Master Servicer and the Trustee without the
consent of any of the Certificateholders, (i) to cure any ambiguity, (ii) to
correct or supplement any provisions herein which may be defective or
inconsistent with any other provisions herein, (iii) to amend this Agreement in
any respect subject to the provisions below, or (iv) if such amendment, as
evidenced by an Opinion of Counsel (provided by the Person requesting such
amendment) delivered to the Trustee, is reasonably necessary to comply with any
requirements imposed by the Code or any successor or amendatory statute or any
temporary or final regulation, revenue ruling, revenue procedure or other
written official announcement or interpretation relating to federal income tax
laws or any proposed such action which, if made effective, would apply
retroactively to the Trust Fund at least from the effective date of such
amendment; provided that such action (except any amendment described in (iv)
above) shall not, as evidenced by an Opinion of Counsel (provided by the Person
requesting such amendment) delivered to the Trustee and the Certificate Insurer,
adversely affect in any material respect the interests of any Certificateholder
(other than Certificateholders who shall consent to such amendment) or the
Certificate Insurer.
96
102
This Agreement may also be amended from time to time by the
Company, the Master Servicer and the Trustee with the consent of the Certificate
Insurer and the Majority Certificateholders for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders of
Certificates; provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate, (ii) adversely affect in any material
respect the interests of the Holders of any Class of Certificates in a manner
other than as described in (i), without the consent of the Majority
Certificateholders or (iii) reduce the aforesaid percentage of Certificates the
Holders of which are required to consent to any such amendment, without the
consent of the Certificate Insurer and the Holders of all Certificates then
outstanding. Notwithstanding any other provision of this Agreement, for purposes
of the giving or withholding of consents pursuant to this Section 11.03,
Certificates registered in the name of the Company or the Master Servicer or any
affiliate thereof shall be entitled to voting rights with respect to matters
described in (i), (ii) and (iii) of this paragraph.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (provided by the Person requesting
such amendment) to the effect that such amendment will not result in the
imposition of any tax on the Trust Fund pursuant to the REMIC Provisions or
cause the Trust Fund to fail to qualify as a REMIC at any time that any of the
Certificates are outstanding. Any such amendment pursuant to the first
paragraph of this Section 11.03 shall not be deemed to adversely affect in any
material respect the interests of any Certificateholder if such change is
required by the Certificate Insurer, so long as no Certificate Insurer Default
exists, and the Trustee and the Master Servicer receives written confirmation
from each Rating Agency that such amendment will not cause such Rating Agency to
reduce the then current rating or any shadow rating of the affected
Certificates. Promptly after the execution of any such amendment the Trustee
shall furnish a statement describing the amendment to each Certificateholder,
the Certificate Insurer, S&P and Moody's.
It shall not be necessary for the consent of
Certificateholders under this Section 11.03 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
Prior to executing any amendment pursuant to this Section ,
the Trustee shall be entitled to receive an Opinion of Counsel (provided by the
Person requesting such amendment) to the effect that such amendment is
authorized or permitted by this Agreement. The cost of an Opinion of Counsel
delivered pursuant to this Section 11.03 shall be an expense of the party
requesting such amendment, but in any case shall not be an expense of the
Trustee.
The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.
Section 11.04. Recordation of Agreement. To the extent
permitted by applicable law, this Agreement, or a memorandum thereof if
permitted under applicable law, is subject to recordation in all appropriate
public offices for real property records in all of the counties or other
comparable jurisdictions in which any or all of the properties subject to the
Mortgages are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Master Servicer at the
Certificateholders' expense on direction and at the expense of Majority
Certificateholders requesting such recordation, but only when accompanied by an
Opinion of Counsel to the effect that such
97
103
recordation materially and beneficially affects the interests of the
Certificateholders or is necessary for the administration or servicing of the
Mortgage Loans.
Section 11.05. Notices. All demands, notices and
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered to (i) in the case of the Master Servicer,
[____________________________________________________], Attention:
[__________________], (ii) in the case of [Xxxxxx Xxxxxxx ABS Capital I Inc.],
0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: [_____________], (iii) in
the case of the Trustee, [_________________________________], Attention:
[____________________________________________], (iv) in the case of the
Certificateholders, as set forth in the Certificate Register, [(v) in the case
of Moody's, Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 Attention: Home Equity Monitoring Group, (vi) in the case of S&P,
Standard & Poor's Ratings Services, 00 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: Residential Mortgage Surveillance Group, (vii) in the case of DCR,
Duff & Xxxxxx Credit Rating Co., 00 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000, Attention: MBS Monitoring,] (viii) in the case of the
Certificate Insurer, [_________________________________], Attention: and (ix) in
the case of the Underwriters, Xxxxxx Xxxxxxx & Co. Incorporated, 0000 Xxxxxxxx,
0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: ________________,
[___________________]. Any such notices shall be deemed to be effective with
respect to any party hereto upon the receipt of such notice by such party,
except that notices to the Certificateholders shall be effective upon mailing or
personal delivery.
Section 11.06. 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 or of the Certificates or the rights of the Holders
thereof.
Section 11.07. 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 11.08. Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the Master Servicer, the Company,
the Trustee and the Certificateholders and their respective successors and
permitted assigns.
Section 11.09. Headings. The headings of the various articles
and sections of this Agreement have been inserted for convenience of reference
only and shall not be deemed to be part of this Agreement.
Section 11.10 Certificate Insurer Default. Any right conferred
to the Certificate Insurer, including, without limitation, the right to receive
the Premium Amount pursuant to Section 6.05(b)(i) and 6.05(c)(i), shall be
suspended during any period in which a Certificate Insurer Default exists. At
such time as the Certificates are no longer outstanding hereunder, and no
amounts owed to the Certificate Insurer hereunder remain unpaid, the Certificate
Insurer's rights hereunder shall terminate.
Section 11.11. Third Party Beneficiary. The parties agree that
each of the Seller and the Certificate Insurer are intended and shall have all
rights of a third-party beneficiary of this Agreement.
98
104
Section 11.12. Intent of the Parties. It is the intent of the
Company and Certificateholders that, for federal income taxes, state and local
income or franchise taxes and other taxes imposed on or measured by income, the
Certificates will be treated as evidencing beneficial ownership interests in a
REMIC. The parties to this Agreement and the holder of each Certificate, by
acceptance of its Certificate, and each beneficial owner thereof, agree to
treat, and to take no action inconsistent with the treatment of, the
Certificates in accordance with the preceding sentence for purposes of federal
income taxes, state and local income and franchise taxes and other taxes imposed
on or measured by income.
Section 11.13. Notice to Rating Agencies and
Certificateholder.
The Trustee shall use its best efforts to promptly provide
notice to the Rating Agencies and the Certificate Insurer with respect to each
of the following of which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not
been cured;
3. The resignation or termination of the Master Servicer
or the Trustee;
4. The repurchase f Mortgage Loans pursuant to Section
3.03;
5. The final payment to Certificateholders; and
6. Any change in the location of the Collection Account
or the Certificate Accounts.
In addition, the Trustee shall promptly furnish to the Rating
Agencies copies of the following:
1. Each report to Certificateholders described in
Section 6.07; and
2. Each annual independent public accountants' servicing
report described in Section 5.17.
Any such notice pursuant to this Section 11.13 shall be in
writing and shall be deemed to have been duly given if personally delivered or
mailed by first class mail, postage prepaid, or by express delivery service
(except in the case of notice to the Certificate Insurer which notice shall be
given in accordance with Section 11.05 hereof).
Section 11.14. Governing Law. (a) THIS AGREEMENT AND THE
CERTIFICATES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW
YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
99
105
IN WITNESS WHEREOF, the Master Servicer, the Trustee and the
Company have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
[Xxxxxx Xxxxxxx ABS Capital I Inc.],
as Company
By:___________________________________
Name:
Title:
[_________________________________],
as Master Servicer
By:___________________________________
Name:
Title:
[_________________________________],
as Trustee
By:___________________________________
Name:
Title:
100
106
State of ___________
County of __________ )
On the ____ day of _____, 199_, before me, a Notary Public in
and for the State of _________, personally appeared ____________________, known
to me to be a ___________________ of [_________________________________], the
corporation that executed the within instrument and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_________________________
Notary Public My Commission expires ______________
101
107
[Notary Page]
State of ___________ ) ss.:
County of __________ )
On the ____ day of ____________, 199_, before me, a Notary
Public in and for the State of [New York], personally appeared
_____________________, known to me to be Trust Officer of
[_________________________________], the corporation that executed the within
instrument and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
Notary Public My Commission expires ______________
102
108
[Notary Page]
State of New York ) ss.:
County of New York )
On the ____ day of ________, 199_, before me, a Notary Public
in and for the State of New York, personally appeared _______________, known to
me to be _______________ of [Xxxxxx Xxxxxxx ABS Capital I Inc.], the corporation
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunder to set my hand and
affixed my official seal the day and year in this certificate first above
written.
Notary Public
My Commission expires ______________
103
109
[Notary Page]
EXHIBIT A-1
Group I Certificate Insurance Policy
OBLIGATIONS: $____________ POLICY NUMBER ________
[Xxxxxx Xxxxxxx ABS Capital I Inc.] Mortgage Loan Asset-Backed Pass-Through
Certificates, Series 199__-__ Class A-1 Certificates
________________ (the "Insurer"), in consideration of the
payment of the premium and subject to the terms of this Certificate Guaranty
Insurance Policy (this "Policy"), hereby unconditionally and irrevocably
guarantees to any Owner that an amount equal to each full and complete Group I
Insured Payment will be received by [_________________________________], or its
successor, as trustee for the Owners (the "Trustee"), on behalf of the Owners
from the Insurer, for distribution by the Trustee to each Owner of each Owner's
proportionate share of such Group I Insured Payment. The Insurer's obligations
hereunder with respect to a particular Group I Insured Payment shall be
discharged to the extent funds equal to the applicable Group I Insured Payment
are received by the Trustee, whether or not such funds are properly applied by
the Trustee. Group I Insured Payments shall be made only at the time set forth
in this Policy, and no accelerated Group I Insured Payments shall be made
regardless of any acceleration of the Obligations, unless such acceleration is
at the sole option of the Insurer.
Notwithstanding the foregoing paragraph, this Policy does not
cover shortfalls, if any, attributable to the liability of the Trust Fund, the
REMIC or the Trustee for withholding taxes, if any (including interest and
penalties in respect of any such liability).
The Insurer will pay any Group I Insured Payment that is a
Group I Preference Amount on the Business Day following receipt on a Business
Day by the Fiscal Agent (as described below) of (i) a certified copy of the
order requiring the return of the related preference payment, (ii) an opinion of
counsel satisfactory to the Insurer that such order is final and not subject to
appeal (iii) an assignment in such form as is reasonably required by the
Insurer, irrevocably assigning to the Insurer all rights and claims of the Owner
relating to or arising under the Obligations against the debtor which made such
preference payment or otherwise with respect to such preference payment and (iv)
appropriate instruments to effect the appointment of the Insurer as agent for
such Owner in any legal proceeding related to such preference payment, such
instruments being in a form satisfactory to the Insurer, provided that if such
documents are received after 12:00 noon New York City time on such Business Day,
they will be deemed to be received on the following Business Day. Such payments
shall be disbursed to the receiver or trustee in bankruptcy named in the final
order of the court exercising jurisdiction on behalf of the Owner and not to any
Owner directly unless such Owner has returned principal or interest paid on the
Obligations to such receiver or trustee in bankruptcy, in which case such
payment shall be disbursed to such Owner. The Insurer will pay any other amount
payable hereunder no later than 12:00 noon, New York City time, on the later of
(i) the Distribution Date on which the Group I Insured Payment is due or (ii)
the Business Day following receipt in New York, New York on a Business Day by
State Street Bank and Trust Company, N.A., as Fiscal Agent for the Insurer or
any successor fiscal agent appointed by the Insurer (the "Fiscal Agent") of a
Notice (as described below), provided that, if such Notice is received after
12:00 noon, New York City time, on such Business Day, it will be deemed to be
received on the following Business Day. If any such Notice received by the
Fiscal Agent is not in proper form or is otherwise insufficient for the purpose
of making claim hereunder it shall be deemed not to have been
A-1-4
110
received by the Fiscal Agent for purposes of this paragraph, and the Insurer or
the Fiscal Agent, as the case may be, shall promptly so advise the Trustee and
the Trustee may submit an amended Notice.
Group I Insured Payments due hereunder unless otherwise stated
herein will be disbursed by the Fiscal Agent to the Trustee on behalf of the
Owners by wire transfer of immediately available funds in the amount of the
Group I Insured Payment less, in respect of Group I Insured Payments related to
Group I Preference Amounts, any amount held by the Trustee for the payment of
such Group I insured Payment and legally available therefor.
The Fiscal Agent is the agent of the Insurer only and the
Fiscal Agent shall in no event be able to Owners for any acts of the Fiscal
Agent or any failure of the Insurer to deposit or cause to be deposited,
sufficient funds to make payments due under this Policy.
As used herein, the following terms shall have the following
meanings:
"AGREEMENT" means the Pooling and Servicing Agreement dated as
of ______________________, 19____ by and among [Xxxxxx Xxxxxxx
ABS Capital I Inc.], as Company,
[_________________________________], as Master Servicer, and
________, as trustee, without regard to any amendment or
supplement thereto.
"BUSINESS DAY" means any day other than a Saturday, a Sunday
or a day on which banking institutions in New York City or in
the city in which the corporate trust office of the Trustee
under the Agreement is located are authorized or obligated by
law or executive order to close.
"GROUP I INSURED PAYMENT" means, (i) on each Distribution
Date, an amount equal to (a) the Group I Class A Interest
Distribution Amount minus Group I Available Funds and (b) the
Group I Subordination Deficit (to the extent not covered by
Cross-Collateralization Payments (as defined in the Prospectus
Supplement)) and (ii) the unpaid Group I Preference Amount.
"GROUP I PREFERENCE AMOUNT" means any amount previously
distributed to an Owner on the Obligations that is recoverable
and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance
with a full nonappealable order of a court having competent
jurisdiction.
"NOTICE" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of
Exhibit A attached hereto, the original of which is
subsequently delivered by registered or certified mail, from
the Trustee specifying the Group I Insured Payment which shall
be due and owing on the applicable Distribution Date.
"ORIGINATORS" means __________________ and _________________.
"OWNER" means each Holder of a Class A-1 Certificate (as
defined in the Agreement) who, on the applicable Distribution
Date, is entitled under the terms of the Class A-1
Certificates to payment thereunder.
A-1-5
111
"PROSPECTUS SUPPLEMENT" means the form of final Prospectus
Supplement dated __________ __, 199_.
Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Agreement as of the date of
execution of this Policy, without giving effect to any subsequent amendment or
modification to the Agreement unless such amendment or modification has been
approved in writing by the Insurer.
Any notice hereunder or service of process on the Fiscal Agent
of the Insurer may be made at the address listed below for the Fiscal Agent of
the Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is
____________________, Attention: ______________________, or such other address
as the Fiscal Agent shall specify to the Trustee in writing. This Policy is
being issued under and pursuant to, and shall be construed under, the laws of
the State of New York, without giving effect to the conflict of laws principles
thereof
The insurance provided by this Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law. This Policy is not cancelable for any reason. The premium on
this Policy is not refundable for any reason including payment, or provision
being made for payment, prior to maturity of the Obligations.
IN WITNESS WHEREOF, the Insurer has caused this Policy to be
executed and attested this ___th day of ____________, 199_.
---------------------------------
[Insurer]
President
---------------------------------
Attest:
Assistant Secretary
A-1-6
112
EXHIBIT A TO CERTIFICATE GUARANTY INSURANCE POLICY NUMBER: _____ NOTICE
UNDER CERTIFICATE GUARANTY INSURANCE POLICY NUMBER: _____
_____________________________, as Fiscal Agent for [Insurer]
[Address]
Attention:
[Insurer]
[Address]
The undersigned, a duly authorized officer of , as trustee
(the "Trustee"), hereby certifies to _____________________ (the "Fiscal Agent")
and _____________ (the "Insurer"), with reference to Certificate Guaranty
Insurance Policy Number _________ (the "Policy") issued by the Insurer in
respect of the [Xxxxxx Xxxxxxx ABS Capital I Inc.] Mortgage Loan Asset-Backed
Pass-Through Certificates, Series 199__-__ Class A Certificates (the
"Obligations"), that:
(i) the Trustee is the trustee under the Pooling and
Servicing Agreement dated as of
______________________, 19____ by and among [Xxxxxx
Xxxxxxx ABS Capital I Inc.], as Company,
[_________________________________], as Master
Servicer, and the Trustee, as trustee for the Owners
(the "Agreement");
(ii) the Group I Insured Distribution Amount for the
Distribution Date occurring on ______ (the
"Applicable Distribution Date") is $___;
(iii) the Group I Available Funds available under the
Agreement to pay the Group I Insured Distribution
Amount for the Applicable Distribution Date (the
"Group I Available Distribution Amount") is
$_______;
(iv) the amount by which the Group I Insured Distribution
Amount exceeds the Group I Available Distribution
Amount is $___ (the "Group I Deficiency Amount");
(v) the amount of the Group I Preference Amount due and
owing under the policy is $___ (the "Group I
Preference Amount");
(vi) the sum of the Group 1 Deficiency Amount and the
Group I Preference Amount is $________ (the " Group I
Insured Payment");
(vii) the Trustee is making a claim under and pursuant to
the terms of the Policy for the payment of the Group
I Insured Payment; and
(viii) the Trustee directs that payment of the Group I
Insured Payment be made to the following account by
bank wire transfer of federal or other immediately
available funds in accordance with the terms of the
Policy:___________ [Certificate Account]. Any
capitalized term used in this Notice and not
otherwise defined herein shall have the meaning
assigned thereto in the Policy.
A-1-7
113
ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY
INSURANCE COMPANY OR OTHER PERSON FILES AN APPLICATION FOR INSURANCE OR
STATEMENT OF CLAIM CONTAINING ANY MATERIALLY FALSE INFORMATION, OR CONCEALS FOR
THE PURPOSE OF MISLEADING, INFORMATION CONCERNING ANY FACT MATERIAL THERETO,
COMMITS A FRAUDULENT INSURANCE ACT, WHICH IS A CRIME, AND SHALL ALSO BE SUBJECT
TO A CIVIL PENALTY NOT TO EXCEED FIVE THOUSAND DOLLARS AND THE STATED VALUE OF
THE CLAIM FOR EACH SUCH VIOLATION.
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Notice under the Policy as of the ______ day of ____________,
[TRUSTEE]
By______________________
Title:
A-1-8
114
EXHIBIT A-2
Group II Certificate Insurance Policy
CERTIFICATE GUARANTY INSURANCE POLICY
OBLIGATIONS: $____________ POLICY NUMBER ________
[Xxxxxx Xxxxxxx ABS Capital I Inc.] Mortgage Loan Asset-Backed Pass-Through
199__-__ Certificates, Series
Class A-2 Certificates
_______________, (the "Insurer"), in consideration of the
payment of the premium and subject to the terms of this Certificate Guaranty
Insurance Policy (this "Policy"), hereby unconditionally and irrevocably
guarantees to any Owner that an amount equal to each full and complete Group II
Insured Payment will be received by [_________________________________], or its
successor, as trustee for the Owners (the "Trustee"), on behalf of the Owners
from the Insurer, for distribution by the Trustee to each Owner of each Owner's
proportionate share of such Group II Insured Payment. The Insurer's obligations
hereunder with respect to a particular Group II Insured Payment shall be
discharged to the extent funds equal to the applicable Group II Insured Payment
are received by the Trustee, whether or not such funds are properly applied by
the Trustee. Group II Insured Payments shall be made only at the time set forth
in this Policy, and no accelerated Group II Insured Payments shall be made
regardless of any acceleration of the Obligations, unless such acceleration is
at the sole option of the Insurer.
Notwithstanding the foregoing paragraph, this Policy does not
cover shortfalls, if any, attributable to the liability of the Trust Fund, the
REMIC or the Trustee for withholding taxes, if any (including interest and
penalties in respect of any such liability).
The Insurer will pay any Group II Insured Payment that is a
Group II Preference Amount on the Business Day following receipt on a Business
Day by the Fiscal Agent (as described below) of (i) a certified copy of the
order requiring the return of the related preference payment, (ii) an opinion of
counsel satisfactory to the Insurer that such order is final and not subject to
appeal, (iii) an assignment in such form as is reasonably required by the
Insurer, irrevocably assigning to the Insurer all rights and claims of the Owner
relating to or arising under the Obligations against the debtor which made such
preference payment or otherwise with respect to such preference payment and (iv)
appropriate instruments to effect the appointment of the Insurer as agent for
such Owner in any legal proceeding related to such preference payment, such
instruments being in a form satisfactory to the Insurer, provided that if such
documents are received after 12:00 noon New York City time on such Business Day,
they will be deemed to be received on the following Business Day. Such payments
shall be disbursed to the receiver or trustee in bankruptcy named in the final
order of the court exercising jurisdiction on behalf of the Owner and not to any
Owner directly unless such Owner has returned principal or interest paid on the
Obligations to such receiver or trustee in bankruptcy, in which case such
payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable hereunder no
later than 12:00 noon, New York City time, on the later of (i) the Distribution
Date on which the Group II Insured Payment is due or (ii) the Business Day
following receipt in New York, New York on a Business Day by
_____________________, as Fiscal Agent for the Insurer or any successor fiscal
agent appointed by the Insurer (the "Fiscal Agent") of a Notice (as described
below), provided that, if such Notice is received after 12:00 noon, New York
City time, on such Business Day, it will be deemed to be received on the
following Business Day. If any such Notice received by the Fiscal Agent is not
in proper form or is otherwise insufficient for the purpose of making claim
hereunder it shall be deemed not to have been
A-2-1
115
received by the Fiscal Agent for purposes of this paragraph, and the Insurer or
the Fiscal Agent, as the case may be, shall promptly so advise the Trustee and
the Trustee may submit an amended Notice.
Group II Insured Payments due hereunder unless otherwise
stated herein will be disbursed by the Fiscal Agent to the Trustee on behalf of
the Owners by wire transfer of immediately available funds in the amount of the
Group II Insured Payment less, in respect of Group II Insured Payments related
to Group II Preference Amounts, any amount held by the Trustee for the payment
of such Group II Insured Payment and legally available therefor.
The Fiscal Agent is the agent of the Insurer only and the
Fiscal Agent shall in no event be liable to Owners for any acts of the Fiscal
Agent or any failure of the Insurer to deposit or cause to be deposited,
sufficient funds to make payments due under this Policy.
As used herein, the following terms shall have the following
meanings:
"AGREEMENT" means the Pooling and Servicing Agreement dated as
of ______________________, 19____ by and among [Xxxxxx Xxxxxxx
ABS Capital I Inc.], as Company,
[_________________________________] as Master Servicer, and
__________, as trustee, without regard to any amendment or
supplement thereto.
"BUSINESS DAY" means any day other than a Saturday, a Sunday
or a day on which banking institutions in New York City or in
the city in which the corporate trust office of the Trustee
under the Agreement is located are authorized or obligated by
law or executive order to close.
"GROUP II INSURED PAYMENT" means, (i) on each Distribution
Date, an amount equal to (a) the Group II Class A Interest
Distribution Amount minus Group II Available Funds and (b) the
Group II Subordination Deficit (to the extent not covered by
Cross-Collateralization Payments (as defined in the Prospectus
Supplement)) and (ii) the unpaid Group II Preference Amount.
"GROUP II PREFERENCE AMOUNT" means any amount previously
distributed to an Owner on the obligations that is recoverable
and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance
with a final nonappealable order of a court having competent
jurisdiction.
"NOTICE" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of
Exhibit A attached hereto, the original of which is
subsequently delivered by registered or certified mail, from
the Trustee specifying the Group II Insured Payment which
shall be due and owing on the applicable Distribution Date.
"ORIGINATORS" means _____________________ and
__________________.
"OWNER" means each Holder of a Class A-2 Certificate (as
defined in the Agreement) who, on the applicable Distribution
Date, is entitled under the terms of the Class A-2
Certificates to payment thereunder.
A-2-2
116
"PROSPECTUS SUPPLEMENT" means the form of final Prospectus
Supplement dated ___________ ___, 199_.
Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Agreement as of the date of
execution of this Policy, without giving effect to any subsequent amendment or
modification to the Agreement unless such amendment or modification has been
approved in writing by the Insurer.
Any notice hereunder or service of process on the Fiscal Agent
of the Insurer may be made at the address listed below for the Fiscal Agent of
the Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is
_____________________, Attention: ________________, or such other address as the
Fiscal Agent shall specify to the Trustee in writing. This Policy is being
issued under and pursuant to, and shall be construed under, the laws of the
State of New York, without giving effect to the conflict of laws principles
thereof.
The insurance provided by this Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law. This Policy is not cancelable for any reason. The premium on
this Policy is not refundable for any reason including payment, or provision
being made for payment, prior to maturity of the Obligations.
IN WITNESS WHEREOF, the Insurer has caused this Policy to be executed and
attested this ___th day of __________ 199_.
---------------------------------
[Insurer]
President
---------------------------------
Attest:
Assistant Secretary
A-2-3
117
EXHIBIT A TO CERTIFICATE GUARANTY INSURANCE POLICY NUMBER: _____
NOTICE UNDER CERTIFICATE GUARANTY INSURANCE POLICY NUMBER: _____
_____________________, as Fiscal Agent for [Insurer]
[Address]
Attention:
[Insurer]
[Address]
The undersigned, a duly authorized officer of
_____________________, as trustee (the "Trustee"), hereby certifies to
_____________________ (the "Fiscal Agent") and _________________ (the
"Insurer"), with reference to Certificate Guaranty Insurance Policy Number _____
(the "Policy") issued by the Insurer in respect of the [Xxxxxx Xxxxxxx ABS
Capital I Inc.] Mortgage Loan Asset-Backed Pass-Through Certificates, Series
199__-__, Class A Certificates (the "Obligations"), that:
(i) the Trustee is the trustee under the Pooling and
Servicing Agreement dated as of
______________________, 19____ by and among [Xxxxxx
Xxxxxxx ABS Capital I Inc.], as Company,
[_________________________________] as Master
Servicer, and the Trustee, as trustee for the Owners
(the "Agreement");
(ii) the Group II Insured Distribution Amount for the
Distribution Date occurring on (the "Applicable
Distribution Date") is $_________;
(iii) the Group II Available Funds available under the
Agreement to pay the Group II Insured Distribution
Amount for the Applicable Distribution Date (the
"Group II Available Distribution Amount") is
$________ ;
(iv) the amount by which the Group II Insured Distribution
Amount exceeds the Group II Available Distribution
Amount is $____________(the "Group II Deficiency
Amount");
(v) the amount of the Group II Preference Amount due and
owing under the policy is $________ (the " Group II
Preference Amount");
(vi) the sum of the Group II Deficiency Amount and the
Group II Preference Amount is $___ (the " Group II
Insured Payment");
(vii) the Trustee is making a claim under and pursuant to
the terms of the Policy for the payment of the Group
II Insured Payment; and
(viii) the Trustee directs that payment of the Group II
Insured Payment be made to the following account by
bank wire transfer of federal or other immediately
available funds in accordance with the terms of the
Policy: [Certificate Account].
Any capitalized term used in this Notice and not otherwise
defined herein shall have the meaning assigned thereto in the Policy.
A-2-4
118
ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY
INSURANCE COMPANY OR OTHER PERSON FILES AN APPLICATION FOR INSURANCE OR
STATEMENT OF CLAIM CONTAINING ANY MATERIALLY FALSE INFORMATION, OR CONCEALS FOR
THE PURPOSE OF MISLEADING, INFORMATION CONCERNING ANY FACT MATERIAL THERETO,
COMMITS A FRAUDULENT INSURANCE ACT, WHICH IS A CRIME, AND SHALL ALSO BE SUBJECT
TO A CIVIL PENALTY NOT TO EXCEED FIVE THOUSAND DOLLARS AND THE STATED VALUE OF
THE CLAIM FOR EACH SUCH VIOLATION.
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Notice under the Policy as of the _______ day of _____________, _____.
[TRUSTEE]
By:_____________________________
Title:
X-0-0
000
XXXXXXX X-0
Form of Class [A-1][A-2][A-3][A-4][I S][II S] Certificate
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986.
[THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
[GROUP I][GROUP II] CLASS A CERTIFICATES AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.]
[THIS CLASS [I S][II S] CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933 (THE "1933 ACT") OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND WHICH IS IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.]
[UNTIL THE BALANCE IN THE [GROUP I][GROUP II] Pre-FUNDING ACCOUNT HAS BEEN
REDUCED TO ZERO,][NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO AN EMPLOYEE
BENEFIT PLAN SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE CODE
OR PERSON USING "PLAN ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION
(INCLUDING ANY INSURANCE COMPANY UNDER THE CIRCUMSTANCES DESCRIBED IN THE
AGREEMENT), UNLESS THE TRANSFEREE PROVIDES AN OPINION OF COUNSEL (OR
CERTIFICATION OF FACTS UNDER THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
AGREEMENT) SATISFACTORY TO THE COMPANY AND THE TRUSTEE OR THE CERTIFICATE
REGISTRAR THAT SUCH DISPOSITION WILL NOT VIOLATE THE PROHIBITIVE TRANSACTION
PROVISIONS OF SECTION 406 OF ERISA AND SECTION 4975 OF THE CODE. BY ITS
ACCEPTANCE OF A CERTIFICATE, EACH CERTIFICATEHOLDER WILL BE DEEMED TO HAVE
REPRESENTED AND WARRANTED THAT IT IS NOT SUBJECT TO THE FOREGOING LIMITATION.]
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING
THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. ASSUMING THAT THE MORTGAGE LOANS PREPAY AT AN ASSUMED RATE
OF PREPAYMENT, USED SOLELY FOR THE PURPOSES OF APPLYING THE OID RULES TO
THE CERTIFICATES, EQUAL TO A CONSTANT PREPAYMENT RATE OF ____% PER ANNUM
(THE "PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO
MORE THAN $______________ OF OID PER $__________ OF [CERTIFICATE PRINCIPAL
BALANCE] [INITIAL NOTIONAL AMOUNT], THE YIELD TO MATURITY IS ______% AND THE
AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN
$_________ PER $___________ OF [INITIAL NOTIONAL AMOUNT] [CERTIFICATE PRINCIPAL
BALANCE], COMPUTED USING THE EXACT METHOD. NO REPRESENTATION IS MADE
B-1-1
120
THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON THE PREPAYMENT
ASSUMPTION OR AT ANY OTHER RATE.]
Certificate No. _ [Adjustable] [Fixed] Pass-Through Rate
Class [A-1][A-2][A-3][A-4]
[I S][II S] ____% Initial Pass-Through Rate [Senior][Subordinate]
Date of Pooling and Servicing Aggregate [Notional] [Original Certificate Agreement:
______________________, 19____ Principal Balance] of the Class [A-1][A-2][A-3][A-4][S-1]
[IS-2][IS-1][II S-2]
Certificates: $__________
First Distribution Date: Initial [Notional Amount][Certificate January 25, 1997
Principal Balance of this Certificate: $-----------------
Master Servicer: Percentage Interest: 100% [Master Servicer]
Assumed Final Distribution Date: CUSIP:
MORTGAGE LOAN ASSET-BACKED PASS-THROUGH CERTIFICATE SERIES
199__-__ evidencing a percentage interest in the distributions allocable to the
Class [A- 1][A-2][A-3][A-4][I S][II S] Certificates with respect to a Trust Fund
consisting primarily of a pool of conventional one- to four-family
[adjustable-rate][fixed rate] [first lien][second lien] residential mortgage
loans sold by [Xxxxxx Xxxxxxx ABS Capital I Inc.]
This certifies that __________________ is the registered owner
of the Percentage Interest evidenced by this Certificate in certain
distributions with respect to a Trust Fund consisting primarily of a pool of
conventional one- to four-family [adjustable-rate][fixed rate] [first
lien][second lien] mortgage loans (the "Mortgage Loans"), sold by [Xxxxxx
Xxxxxxx ABS Capital I Inc.] (the "Company"). The Trust Fund was created pursuant
to a Pooling and Servicing Agreement dated as specified above (the "Agreement")
among the Company, the Master Servicer and [_________________________________],
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the holder of this Certificate by virtue of the
acceptance hereof assents and by which such holder is bound.
This Certificate is payable solely from the assets of the
Trust Fund [and the [Group I][Group II] Certificate Insurance Policy (as defined
below)] and does not represent an obligation of or interest in the Company, the
Master Servicer, the Trustee referred to below or any of their affiliates.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality or by the Company, the
Master Servicer, the Trustee or any of their affiliates. None of the Company,
the Master Servicer, or any of their affiliates will have any obligation with
respect to any certificate or other obligation secured by or payable from
payments on the Certificates.
[____________________ (the "Certificate Insurer") has issued a
certificate insurance policy (the "[Group I][Group II] Certificate Insurance
Policy") with respect to the Class A-_ Certificates, a copy of which is attached
to the Agreement.]
B-1-2
121
Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such Distribution Date (the "Record Date"),
from the [Group I][Group II] Available Funds and in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
(of interest and principal, if any) required to be distributed to holders of
Class [A-1][A-2][A-3][A-4][I S][II S] Certificates on such Distribution Date.
All distributions on this Certificate will be made or caused
to be made by the Trustee in immediately available funds either (i) by check
mailed to the address of the Person entitled thereto, as such name and address
shall appear on the Certificate Register or (ii) by wire transfer to the account
of any Person entitled thereto if such Person shall have so notified the Trustee
and such Certificateholder is the registered holder of Class
[A-1][A-2][A-3][A-4][I S][II S] Certificates the aggregate [Certificate
Principal Balance] [Notional Amount] of which is not less than $5,000,000.
Notwithstanding the above, the final distribution on this
Certificate will be made after due notice of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose. The initial [Certificate
Principal Balance] [Notional Amount] of this Certificate is set forth above. The
[Certificate Principal Balance] [Notional Amount] hereof will be reduced by of
distributions of the Class [A-1][A-2][A-3][A-4][I S][II S] Principal
Distribution Amount.
This Certificate is one of a duly authorized issue of
Certificates issued in __________ Classes designated as Mortgage Loan
Asset-Backed Pass-Through Certificates of the Series specified hereon (herein
collectively called the "Certificates").
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. In the event that Master
Servicer funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicer, to the extent provided in the Agreement,
from related recoveries on such Mortgage Loan or from other cash that would have
been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Collection
Account and/or the Certificate Account created for the benefit of
Certificateholders may be made by the Master Servicer from time to time for
purposes other than distributions to Certificateholders, such purposes including
without limitation reimbursement to the Company and the Master Servicer of
advances made, or certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein
provided, the amendment of the Agreement and the modification of the rights and
obligations of the Company, the Master Servicer and the Trustee and the rights
of the Certificateholders under the Agreement at any time by the Company, the
Master Servicer and the Trustee with the consent of the Certificate Insurer and
the Majority Certificateholders. Any such consent by the holder of this
Certificate shall be conclusive and binding on such holder and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon the Certificate. The Agreement also permits the amendment
thereof in certain circumstances without the consent of the holders of any of
the Certificates and, in certain additional circumstances, without the consent
of the holders of certain Classes of Certificates.
B-1-3
122
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee in the City and
State of New York, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same Class and aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates
in Classes and in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of authorized denominations evidencing the
same Class and aggregate Percentage Interest, as requested by the holder
surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
[No transfer of this Class A-___ Certificate will be made
unless the transferee provides the Trustee with either (i) an opinion of counsel
acceptable to and in form and substance satisfactory to the Trustee, the Company
and the Master Servicer with respect to the permissibility of such transfer
under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Internal Revenue Code (the "Code") and stating, among
other things, that the transferee's acquisition of a Class A-___ Certificate is
permissible under applicable law, will not constitute or result in any
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code and will not subject the Trustee, the Company or the Master Servicer to
any obligation or liability in addition to those undertaken in the Agreement or
(ii) in lieu of such opinion of counsel, a certification in the form set forth
in Exhibit S to the Agreement.]
[Until the balance in the [Group I][Group II] Pre-Funding
Account has been reduced to zero,][No transfer of any Class [A-1][A-2][I S][II
S] Certificate shall be made to any employee benefit plan or other retirement
arrangement, including individual retirement accounts and annuities and Xxxxx
plans, that is subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") (any of the foregoing, a "Plan") to any Person acting on
behalf of a Plan, or to any other Person who is using "plan assets" to effect
such acquisition (including any insurance company using funds in its general or
separate accounts that may constitute "plan assets"), unless the prospective
transferee of a Certificateholder desiring to transfer its Certificates provides
to the Trustee or the Certificate Registrar an Opinion of Counsel (or, in the
limited circumstances described in the Agreement, a certification of facts)
which establishes to the satisfaction of the Company and the Trustee or the
Certificate Registrar that such disposition will not violate the prohibited
transaction provisions of Section 406 of ERISA and Section 4975 of the Code.]
The Company, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Company, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Company, the Master Servicer, the Trustee nor any suc agent shall be affected by
notice to the contrary.
B-1-4
123
This Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
The obligations created by the Agreement in respect of the
Certificates and the Trust Fund created thereby shall terminate upon the payment
to Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by the holder of a 50.01%
or greater Percentage Interest of the Class R Certificates or the Master
Servicer (and the Certificate Insurer, if the initial Master Servicer is
terminated) from the Trust Fund of all remaining Mortgage Loans, thereby
effecting early retirement of the Class [A-1][A-2][A-3][A-4][I S][II S]
Certificates. The Agreement permits, but does not require, such Class R
Certificateholder, the Master Servicer or the Certificate Insurer, as
applicable, to purchase at a price determined as provided in the Agreement all
remaining Mortgage Loans; provided, that any such option may only be exercised
if the Pool Principal Balance as of the Distribution Date upon which the
proceeds of any such purchase are distributed is less than 10% (or 5% with
respect to the Master Servicer or Certificate Insurer) of the Original Pool
Principal Balance (net of any excess of the Original PreFunded Amounts over the
aggregate of the Principal Balances of the Subsequent Mortgage Loans as of their
respective Subsequent Cut-off Dates).
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: _________ __, 199_
[Trustee], as Trustee
By:_______________________
Authorized Signatory
B-1-5
124
CERTIFICATE OF AUTHENTICATION _____________________________
This is one of the Class [A-1][A-2][A-3][A-4][I S][II S]
Certificates referred to in the within-mentioned Agreement.
______________________________________,
as Certificate Registrar
By:______________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Mortgage Loan Asset-Backed Pass-Through Certificate and
hereby authorize(s) the registration of transfer of such interest to assignee on
the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new Certificate of a
like Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
Dated: __________________
_________________________________________
Signature by or on behalf of assignor
_________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution: Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
_______________________________________________________________________________
for the account of ____________________________________________________________
account number ___________________, or, if mailed by check, to
__________________________________________. Applicable statements should be
mailed to ____________________________________. This information
B-1-6
125
is provided by ___________________________________________________, the assignee
named above, or _____________________________, as its agent.
B-1-7
126
EXHIBIT B-2
Form of Class [R] Certificate
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES PERSON
OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
PLAN SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE CODE, UNLESS THE
TRANSFEREE PROVIDES AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICER,
THE COMPANY AND THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE BY, ON BEHALF
OF OR WITH "PLAN ASSETS" OF SUCH PLAN IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION AND WILL NOT
SUBJECT THE SERVICER, THE COMPANY OR THE TRUSTEE TO ANY OBLIGATION IN ADDITION
TO THOSE UNDERTAKEN IN THE AGREEMENT.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER SERVICER
AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (a) THE UNITED STATES, ANY STATE
OR POLITICAL SUBDIVISION THEREOF, ANY POSSESSION OF THE UNITED STATES, OR ANY
AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN AN INSTRUMENTALITY
WHICH IS A CORPORATION IF ALL OF ITS ACTIVITIES ARE SUBJECT TO TAX AND, EXCEPT
FOR THE FHLMC, A MAJORITY OF ITS BOARD OF DIRECTORS IS NOT SELECTED BY SUCH
GOVERNMENTAL UNIT), (B) A FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR
ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (C) ANY ORGANIZATION
(OTHER THAN CERTAIN FARMERS' COOPERATIVES DESCRIBED IN SECTION 521 OF THE CODE)
WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE (INCLUDING THE TAX
IMPOSED BY SECTION 511 OF THE CODE ON UNRELATED BUSINESS TAXABLE INCOME), (D)
RURAL ELECTRIC AND TELEPHONE COOPERATIVES DESCRIBED IN SECTION 1381(A)(2)(C) OF
THE CODE AND (E) ANY OTHER PERSON SO DESIGNATED BY THE TRUSTEE BASED UPON AN
OPINION OF COUNSEL THAT THE HOLDING OF AN OWNERSHIP INTEREST IN A CLASS [R]
CERTIFICATE BY SUCH PERSON MAY CAUSE THE TRUST FUND OR ANY PERSON HAVING AN
OWNERSHIP INTEREST IN ANY CLASS OF CERTIFICATES (OTHER THAN SUCH PERSON) TO
INCUR A LIABILITY FOR ANY FEDERAL TAX IMPOSED UNDER THE CODE THAT WOULD NOT
OTHERWISE BE IMPOSED BUT FOR THE TRANSFER OF AN OWNERSHIP INTEREST IN A CLASS
[R] CERTIFICATE TO SUCH PERSON (ANY SUCH PERSON DESCRIBED IN THE FOREGOING
CLAUSES (A), (B), (C), (D) OR (E) BEING HEREIN REFERRED TO AS A "DISQUALIFIED
ORGANIZATION") OR AN AGENT OF A DISQUALIFIED ORGANIZATION, (2) NO PURPOSE OF
SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND (3) SUCH
TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL
CONDITION OF THE PROPOSED TRANSFREE.
B-2-1
127
THE TERMS "UNITED STATES," "STATE" AND "INTERNATIONAL ORGANIZATION" SHALL HAVE
THE MEANINGS SET FORTH IN SECTION 7701 OF THE CODE OR SUCCESSOR PROVISIONS.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OR ANY TRANSFER,
SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR
AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE
OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE
A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO,
THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS
CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED
TO THE PROVISIONS OF THIS PARAGRAPH.
THIS CLASS [R] CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933 (THE "1933 ACT") OR THE SECURITIES LAWS OF ANY STATE. ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND WHICH IS IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
Certificate No. R-_
Class [R] Original Pool Principal Balance: Subordinate
$_______________
Date of Pooling and Servicing Agreement:
______________________, 19____
First Distribution Date:
__________________, 199_
Master Servicer: Percentage Interest: ___% [Master Servicer]
Assumed Final Distribution Date:
MORTGAGE LOAN ASSET-BACKED PASS-THROUGH CERTIFICATE, SERIES
199__-__ evidencing a percentage interest in any distributions allocable to the
Class [R] Certificates with respect to a Trust Fund consisting primarily of a
pool of conventional one- to four-family [adjustable-rate][fixed rate] [first
lien][second lien] residential mortgage loans sold by [Xxxxxx Xxxxxxx ABS
Capital I Inc.] This certifies that ____________________________ is the
registered owner of the Percentage Interest evidenced by this Certificate in
certain distributions with respect to a Trust Fund consisting primarily of a
pool of conventional one- to four-family [adjustable-rate][fixed rate] [first
lien][second lien] residential mortgage loans (the "Mortgage Loans"), sold by
[Xxxxxx Xxxxxxx ABS Capital I Inc.] (the "Company"). The Trust Fund was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") among the Company, the Master Servicer and
[_________________________________], as trustee (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
B-2-2
128
This Certificate is payable solely from the assets of the
Trust Fund and does not represent an obligation of or interest in the Company,
the Master Servicer, the Trustee referred to below or any of their affiliates.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality or by the Company, the
Master Servicer, the Trustee or any of their affiliates. None of the Company,
the Master Servicer, or any of their affiliates will have any obligation with
respect to any certificate or other obligation secured by or payable from
payments on the Certificates.
Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day immediately
preceding the month of such Distribution Date (the "Record Date"), from the
Available Funds in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount (of interest and principal, if any)
required to be distributed to Holders of Class [R] Certificates on such
Distribution Date.
Each Holder of this Certificate will be deemed to have agreed
to be bound by the restrictions set forth in the Agreement to the effect that
(i) each person holding or acquiring any Ownership Interest in this Certificate
must be a United States Person and a Permitted Transferee, (ii) the transfer of
any Ownership Interest in this Certificate will be conditioned upon the delivery
to the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Company will have the right, in its
sole discretion and without notice to the Holder of this Certificate, to sell
this Certificate to a purchaser selected by the Company, which purchaser may be
the Company, or any affiliate of the Company, on such terms and conditions as
the Company may choose.
No transfer of any Class [R] Certificate shall be made unless
that transfer is made pursuant to an effective registration statement under the
1933 Act and effective registration or qualification under applicable state
securities laws, or is made in a transaction which does not require such
registration or qualification. In the event that a transfer is to be made
without such registration or qualification, (a) the Trustee and the Company
shall require the transferee to execute an investment letter, which investment
letter shall not be an expense of the Company, the Master Servicer or the
Trustee and (b) in the event that such a transfer is not made pursuant to Rule
144A under the Act, the Trustee shall require an Opinion of Counsel satisfactory
to the Trustee and the Company that such transfer may be made without such
registration or qualification, which Opinion of Counsel shall not be an expense
of the Company, the Trustee or the Master Servicer. Neither the Company nor the
Trustee is obligated to register or qualify any of the Class [R] Certificates
under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Company and the Master Servicer against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
Notwithstanding the above, the final distribution on this
Certificate will be made after due notice of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose. The Percentage Interest this
Certificate
B-2-3
129
is set forth above. Notwithstanding the fact this Certificate has no Certificate
Principal Balance, this Certificate will remain outstanding under the Agreement
and the Holder hereof may have additional obligations with respect to this
Certificate, including tax liabilities, and may be entitled to certain
additional distributions hereon, in accordance with the terms and provisions of
the Agreement.
This Certificate is one of a duly authorized issue of
Certificates issued in two Classes designated as Mortgage Loan Asset-Backed
Pass-Through Certificates of the Series specified hereon (herein collectively
called the "Certificates").
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. In the event that Master
Servicer funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicer, to the extent provided in the Agreement,
from related recoveries on such Mortgage Loan or from other cash that would have
been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Collection
Account and/or the Certificate Account created for the benefit of
Certificateholders may be made by the Master Servicer from time to time for
purposes other than distributions to Certificateholders, such purposes including
without limitation reimbursement to the Company and the Master Servicer of
advances made, or certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein
provided, the amendment of the Agreement and the modification of the rights and
obligations of the Company, the Master Servicer and the Trustee and the rights
of the Certificateholders under the Agreement at any time by the Company, the
Master Servicer and the Trustee with the consent of the Certificate Insurer and
the Majority Certificateholders. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon the Certificate. The Agreement also permits the amendment
thereof in certain circumstances without the consent of the Holders of any of
the Certificates and, in certain additional circumstances, without the consent
of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee in the City and
State of New York, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same Class and aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
X-0-0
000
Xx service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Company, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Company, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Company, the Master Servicer, the Trustee nor any such agent shall be affected
by notice to the contrary.
This Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
The obligations created by the Agreement in respect of the
Certificates and the Trust Fund created thereby shall terminate upon the payment
to Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by the holder of a 50.01%
or greater Percentage Interest of the Class R Certificates or the Master
Servicer (and the Certificate Insurer, if the initial Master Servicer is
terminated) from the Trust Fund of all remaining Mortgage Loans, thereby
effecting early retirement of the Class R Certificates. The Agreement permits,
but does not require, such Class R Certificateholder, the Master Servicer or the
Certificate Insurer, as applicable, to purchase at a price determined as
provided in the Agreement all remaining Mortgage Loans; provided, that any such
option may only be exercised if the Pool Principal Balance as of the
Distribution Date upon which the proceeds of any such purchase are distributed
is less than [10]% (or [5]% with respect to the Master Servicer or Certificate
Insurer) of the Original Pool Principal Balance.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: __________ __, 199_
_________________, as Trustee
By:_________________________
Authorized Signatory
B-2-5
131
CERTIFICATE OF AUTHENTICATION
This is one of the Class [R] Certificates referred to in the within-mentioned
Agreement.
__________________________ as Certificate Registrar
By:_________________________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________(
Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Mortgage Loan Asset-Backed Pass-Through Certificate and
hereby authorize(s) the registration of transfer of such interest to assignee on
the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new Certificate of a
like Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________.
Dated: _______________
________________________________________
Signature by or on behalf of assignor
________________________________________
Signature Guaranteed
_______________________________________________________DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________
_____________________________________________________________________________for
the account of _____________________________________________________________
account number ___________________________, or, if mailed by check, to
____________________________________. Applicable statements should be mailed to
____________________________________. This information is provided by
___________________________________________________, the assignee named above,
or _____________________________, as its agent.
B-2-6
132
EXHIBIT C
Mortgage File
With respect to each Group I Loan and Group II Loan, the
Mortgage File shall include each of the following items (copies to the extent
the originals have been delivered to the Trustee pursuant to Section 2.03 of the
Agreement), all of which shall be available for inspection by the
Certificateholders, to the extent required by applicable laws:
a. The original Mortgage Note bearing all intervening
endorsements showing a complete chain of endorsement,
from the originator of such Mortgage Loan to the
Seller, endorsed by the Seller without recourse in
blank and signed in the name of the Seller by an
authorized officer;
b. The original Mortgage and any related power of
attorney with evidence of recording thereon;
c. An original assignment of the original Mortgage, in
suitable form for recordation in the jurisdiction in
which the Mortgaged Property is located, such
assignment to be in blank and signed in the name of
the Seller by an authorized officer;
d. The original of all intervening assignments of the
Mortgage showing a complete chain of assignments from
the originator of such Mortgage Loan to the Seller
with evidence of recording indicated thereon;
e. Any assumption, modification (with evidence of
recording thereon), consolidation or extension
agreements; and
f. The original policy of title insurance (or a
commitment for title insurance is being held by the
title insurance company pending recordation of the
Mortgage) and the certificate of primary mortgage
guaranty insurance, if any, issued with respect to
the Mortgage Loan.
B-2-7
133
EXHIBIT D-1
Mortgage Loan Schedule
D-1-1
134
EXHIBIT D-2
Mortgage Loan Schedule
D-2-1
135
EXHIBIT E
Trustee's Acknowledgment of Receipt
_________________, 199_
[Xxxxxx Xxxxxxx ABS Capital I Inc.]
[Address]
[Master Servicer]
[Address]
[Insurer]
[Address]
Re: Pooling and Servicing Agreement, dated as of ______________________,
19____ among [Xxxxxx Xxxxxxx ABS Capital I Inc.], as Company,
[_________________________________], as Master Servicer, and
[_________________________________], as Trustee, Mortgage Loan
Asset-Backed Pass-Through Certificates, Series 199__-__,
Ladies and Gentlemen:
In accordance with Section 2.04 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as Trustee, hereby certifies: (1)
except as noted on the attachment hereto, if any (the "Loan Exception Report"),
it has received the original Mortgage Note (item (i) in Section 2.03(a)) with
respect to each Mortgage Loan listed in the Mortgage Loan Schedule and the
documents contained therein appear to bear original signatures or copies of
originals if the originals have not yet been delivered, and (2) it has received
the Certificate Insurance Policy.
The Trustee has made no independent examination of any such
documents beyond the review specifically required in the above-referenced
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any such
documents or any of the Mortgage Loans identified on the Mortgage Loan Schedule,
or (ii) the collectability, insurability, effectiveness or suitability of any
such Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement. NORWEST BANK MINNESOTA,
_________________, as Trustee
By:_________________________
Name:
Title:
136
EXHIBIT F
Initial Certification of Trustee
______________________, 19_
[Xxxxxx Xxxxxxx ABS Capital I Inc.]
[Address]
[Master Servicer]
[Address]
[Insurer]
[Address]
Re: Pooling and Servicing Agreement, dated as of ______________________,
19____ among [Xxxxxx Xxxxxxx ABS Capital I Inc.], as Company,
[_________________________________], as Master Servicer, and
[_________________________________], as Trustee, Mortgage Loan
Asset-Backed Pass-Through Certificates, Series 199__-__
Ladies and Gentlemen:
In accordance with the provisions of Section 2.04 of the
above-referenced Pooling and Servicing Agreement, the undersigned, as Trustee,
hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan listed
on the attachment hereto), it has reviewed the documents delivered to it
pursuant to Section 2.03 of the Pooling and Servicing Agreement and has
determined that (a) all documents required to be delivered to it pursuant to the
above-referenced Pooling and Servicing Agreement are in its possession, (b) such
documents have been reviewed by it and appear regular on their face and have not
been mutilated, damaged, torn or otherwise physically altered and relate to such
Mortgage Loan, (c) based on its examination and only as to the foregoing
documents, the information set forth in the Mortgage Loan Schedule (described in
the definition of Mortgage Loan Schedule as items (i) the Mortgage Loan
identifying the Trustee, (ii) the city, state and zip code of the property, (v)
the original term of the mortgage, (vi) the scheduled maturity date, (x) the
original interest rate, (xi) the gross margin on Group I Mortgage Loans and the
adjustment frequency and, (xiii) the first rate adjustment date and frequency of
adjustment dates) respecting such Mortgage Loan accurately reflects the
information set forth in the Trustee's Mortgage File and each Mortgage Note has
been endorsed as provided in Section 2.03 of the Pooling and Servicing
Agreement. The Trustee has made no independent examination of such documents
beyond the review specifically required in the above-referenced Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
F-1
137
_________________, as Trustee
By:_________________________
Name:
Title:
F-2
138
EXHIBIT G
Final Certification of the Trustee
____________________, 19_
[Xxxxxx Xxxxxxx ABS Capital I Inc.]
[Address]
[Master Servicer]
[Address]
[Insurer]
[Address]
Re: Pooling and Servicing Agreement, dated as of ______________________,
19____ among [Xxxxxx Xxxxxxx ABS Capital I Inc.], as Company,
[_________________________________], as Master Servicer, and
[_________________________________], as Trustee, Mortgage Loan
Asset-Backed Pass-Through Certificates, Series 199__-__
Ladies and Gentlemen:
In accordance with Section 2.04 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as Trustee, hereby certifies that,
except as noted on the attachment hereto, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attachment hereto) it has reviewed the documents delivered to it pursuant to
Section 2.03 of the Pooling and Servicing Agreement and has determined that (a)
all documents required to be delivered to it pursuant to the above-referenced
Pooling and Servicing Agreement are in its possession, (b) such documents have
been reviewed by it and appear regular on their face and have not been
mutilated, damaged, torn or otherwise physically altered and relate to such
Mortgage Loan, and (c) based on its examination, and only as to the foregoing
documents, the information set forth in the Mortgage Loan Schedule (described in
items (i), (ii), (v), (vi), (x), (xi) and (xiii) of the definition of Mortgage
Loan Schedule) respecting such Mortgage Loan accurately reflects the information
set forth in the Trustee's Mortgage File. The Trustee has made no independent
examination of such documents beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, enforceability or genuineness
of any such documents contained in each or any of the Mortgage Loans identified
on the Mortgage Loan Schedule, or (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
_________________, as Trustee
By:_________________________
G-1
139
Name:
Title:
G-2
140
EXHIBIT H
Request for Release of Documents
________________, 19_
To: [Trustee]
[Address]
Attn:
Re: [[Xxxxxx Xxxxxxx ABS Capital I Inc.]], Mortgage Loan Asset-Backed
Pass-Through Certificates, Series 199__-__
In connection with the administration of the pool of Mortgage
Loans held by you as Trustee for the Certificateholders, we request the release,
and acknowledge receipt, of the (Trustee's Mortgage File/[specify document]) for
the Mortgage Loan described below, for the reason indicated.
MORTGAGOR'S NAME, ADDRESS & ZIP CODE:
MORTGAGE LOAN NUMBER:
REASON FOR REQUESTING DOCUMENTS (check one)
1. Mortgage Loan Paid in Full (Master Servicer hereby
certifies that all amounts received in connection
therewith have been credited to the Collection
Account.)
2. Mortgage Loan Liquidated (Master Servicer hereby
certifies that all proceeds of foreclosure, insurance
or other liquidation have been finally received and
credited to the Collection Account.)
3. Mortgage Loan in Foreclosure
4. Mortgage Loan Repurchased Pursuant to Section 5.18 of
the Pooling and Servicing Agreement.
5. Mortgage Loan Repurchased or Substituted pursuant to
Article II or III of the Pooling and Servicing
Agreement (Master Servicer hereby certifies that the
repurchase price or Substitution Adjustment has been
credited to the Certificate Account and that the
substituted mortgage loan is a Qualified Substitute
Mortgage Loan.)
6. Other (explain)_______________________________.
If box 1 or 2 above is checked, and if all or part of the
Trustee's Mortgage File was previously released to us, please release to us our
previous receipt on file with you, as well as any additional documents in your
possession relating to the above specified Mortgage Loan.
H-1
141
If box 3, 4, 5 or 6 above is checked, upon our return of all
of the above documents to you as Trustee, please acknowledge your receipt by
signing in the space indicated below, and returning this form.
By:_________________________
Name:
Title:
Documents returned to Trustee:
_________, as Trustee
By:_________________________
Name:
Title:
H-2
142
EXHIBIT I
Form of Transfer Affidavit and Agreement
STATE OF ) : ss.:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Owner] (record or
beneficial owner of the Mortgage Loan Asset-Backed Pass-Through Certificates,
Series 199__-__, Class [R] (the "Owner")), a [savings institution] [corporation]
duly organized and existing under the laws of [the State of __________________]
[the United States], on behalf of which he makes this affidavit and agreement.
2. That the Owner (i) is not and will not be a "disqualified
organization" as of [date of transfer] within the meaning of Section 860E(e)(5)
of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) will
endeavor to remain other than a disqualified organization for so long as it
retains its ownership interest in the Class [R] Certificates, and (iii) is
acquiring the Class [R] Certificates for its own account or for the account of
another Owner from which it has received an affidavit and agreement in
substantially the same form as this affidavit and agreement. (For this purpose,
a "disqualified organization" means the United States, any state or political
subdivision thereof, any agency or instrumentality of any of the foregoing
(other than an instrumentality all of the activities of which are subject to tax
and, except for the Federal Home Loan Mortgage Corporation, a majority of whose
board of directors is not selected by any such governmental entity) or any
foreign government, international organization or any agency or instrumentality
of such foreign government or organization, any rural electric or telephone
cooperative, or any organization (other than certain farmers' cooperatives) that
is generally exempt from federal income tax unless such organization is subject
to the tax on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be
imposed on transfers of Class [R] Certificates to disqualified organizations
under the Code, that applies to all transfers of Class [R] Certificates after
[March 31, 1988]; (ii) that such tax would be on the transferor, or, if such
transfer is through an agent (which person includes a broker, nominee or
middleman) for a disqualified organization, on the agent; (iii) that the person
otherwise liable for the tax shall be relieved of liability for the tax if the
transferee furnishes to such person an affidavit that the transferee is not a
disqualified organization and, at the time of transfer, such person does not
have actual knowledge that the affidavit is false; and (iv) that the Class [R]
Certificates may be "noneconomic residual interests" within the meaning of
Treasury regulations promulgated pursuant to the Code and that the transferor of
a noneconomic residual interest will remain liable for any taxes due with
respect to the income on such residual interest, unless no significant purpose
of the transfer was to impede the assessment or collection of tax.
4. That the Owner is aware of the tax imposed on a
"pass-through entity" holding Class [R] Certificates if at any time during the
taxable year of the pass-through entity a disqualified organization is the
record holder of an interest in such entity. (For this purpose, a "pass through
entity" includes a regulated investment company, a real estate investment trust
or common trust fund, a partnership, trust or estate, and certain cooperatives.)
I-1
143
5. That the Owner is aware that the Trustee will not register
the transfer of any Class [R] Certificates unless the transferee, or the
transferee's agent, delivers to it an affidavit and agreement, among other
things, in substantially the same form as this affidavit and agreement. The
Owner expressly agrees that it will not consummate any such transfer if it knows
or believes that any of the representations contained in such affidavit and
agreement are false.
6. That the Owner has reviewed the restrictions set forth on
the face of the Class [R] Certificates and the provisions of Section 4.02(i) of
the Pooling and Servicing Agreement under which the Class [R] Certificates were
issued (in particular, clause (g) and (h) of Section 4.02(i) which authorize the
Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event the Owner holds such Certificates in
violation of Section 4.02(i)). The Owner expressly agrees to be bound by and to
comply with such restrictions and provisions.
7. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class [R] Certificates will only be
owned, directly or indirectly, by an Owner that is not a disqualified
organization.
8. The Owner's Taxpayer Identification Number is
______________.
9. This affidavit and agreement relates only to the Class [R]
Certificates held by the Owner and not to any other holder of the Class [R]
Certificates. The Owner understands that the liabilities described herein relate
only to the Class [R] Certificates.
10. That no purpose of the Owner relating to the transfer of
any of the Class [R] Certificates by the Owner is or will be to impede the
assessment or collection of any tax.
11. That the Owner has no present knowledge or expectation
that it will be unable to pay any United States taxes owed by it so long as any
of the Certificates remain outstanding. In this regard, the Owner hereby
represents to and for the benefit of the person from whom it acquired the Class
[R] Certificate that the Owner intends to pay taxes associated with holding such
Class [R] Certificate as they become due, fully understanding that it may incur
tax liabilities in excess of any cash flows generated by the Class [R]
Certificate.
12. That the Owner has no present knowledge or expectation
that it will become insolvent or subject to a bankruptcy proceeding for so long
as any of the Class [R] Certificates remain outstanding.
13. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
I-2
144
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Title of Officer] and its corporate seal to be hereunto attached, attested
by its [Assistant] Secretary, this ____ day of _______________, 199__.
[NAME OF OWNER]
By:____________________________________
[Corporate Seal]
[Name of Officer]
[Title of Officer]
ATTEST:
----------------------------
[Assistant] Secretary
Personally appeared before me the above-named [Name of
Officer], known or proved to me to be the same person who executed the foregoing
instrument and to be the [Title of Officer] of the Owner, and acknowledged to me
that he executed the same as his free act and deed and the free act and deed of
the Owner.
Subscribed and sworn before
me this ____ day of ________________, 199__.
___________________________________________
NOTARY PUBLIC COUNTY OF ___________________
STATE OF __________________________________
My Commission expires the
_______ day of _______________, 19__.
I-3
145
EXHIBIT J
Form of Transferor Certificate
__________________, 19__
[Xxxxxx Xxxxxxx ABS Capital I Inc.]
[Address]
[Trustee]
[Address]
Attention: [Xxxxxx Xxxxxxx ABS Capital I Inc.]
Re: Mortgage Loan Asset-Backed Pass-Through Certificates, Series 199__-__
Ladies and Gentlemen:
This letter is delivered to you in connection with the
transfer by _______________________________ (the "Seller") to
_______________________________ (the "Purchaser") of a ____% Percentage
Interests of Mortgage Loan Asset-Backed Pass-Through Certificates, Series
199__-__, [Class I S], [Class II S] and [Class R] Certificates (collectively,
the "Certificates"; and each individually, a "Certificate"), pursuant to Section
4.02 of the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of ______________________, 19____, among [Xxxxxx Xxxxxxx
ABS Capital I Inc.], as seller (the "Company"),
[_________________________________], as Master Servicer, and
[_________________________________], as trustee (the "Trustee"). All terms used
herein and not otherwise defined shall have the meanings set forth in the
Pooling and Servicing Agreement. The Seller hereby certifies, represents and
warrants to, and covenants with, the Company and the Trustee that:
1. No purpose of the Seller relating to the transfer of the
Certificates by the Seller to the Purchaser is or will be to impede the
assessment or collection of any tax.
2. The Seller understands that the Purchaser has delivered to
the Trustee and the Master Servicer a transfer affidavit and agreement in the
form attached to the Pooling and Servicing Agreement as Exhibit I. The Seller
does not know or believe that any representation contained therein is false.
3. The Seller has at the time of the transfer conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Seller has determined that the Purchaser has
historically paid its debts as they become due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Seller understands that the transfer of a
Class [R] Certificate may not be respected for United States income tax purposes
(and the Seller may continue to be liable for United States income taxes
associated therewith) unless the Seller has conducted such an investigation.
J-1
146
4. The Seller has no actual knowledge that the proposed
Transferee is not both a United States Person and a Permitted Transferee.
Very truly yours,
(Seller)
By:____________________________
Name:
Title:
J-2
147
EXHIBIT K
____________, 1996
[Trustee]
[Address]
Attn:
Re: [Xxxxxx Xxxxxxx ABS Capital I Inc.] Mortgage Loan Asset-Backed
Pass-Through Certificates, Series 199__-__, Class R
This letter is delivered to you in connection with the
transfer by _____________________ (the "Seller") to ___________________ (the
"Purchaser") of Mortgage Loan Asset-Backed Pass-Through Certificates Series
199__-__, Class [R] (the "Certificates"), pursuant to Section 4.02 of the
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"), dated
as of ______________________, 19____ among [Xxxxxx Xxxxxxx ABS Capital I Inc.]
as Company (the "Company"), [_________________________________], as Master
Servicer, and [_________________________________], as Trustee (the "Trustee").
All terms used herein and not otherwise defined shall have the meanings set
forth in the Pooling and Servicing Agreement. The Purchaser hereby certifies,
represents and warrants to, and covenants with, the Company and the Trustee
that: The Purchaser is not an employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or other Internal
Revenue Code of 1986, as amended (the "Code"), nor a Person acting directly on
behalf of any such plan.
Very truly yours,
(Purchaser)
By:____________________________
Name:
Title:
K-1
148
EXHIBIT L
[RESERVED]
K-1
149
EXHIBIT M
Certificate Re: Prepaid Loans
I, , of ____________________________, as Seller, hereby
certify that between the "Cut-Off Date" (as defined in the Pooling and Servicing
Agreement dated as of ______________________, 19____ among [Xxxxxx Xxxxxxx ABS
Capital I Inc.], [_________________________________], as Master Servicer
[_________________________________], as trustees) and the "Startup Day" the
following schedule of "Mortgage Loans" (each as defined in the Pooling and
Servicing Agreement) have been prepaid in full.
Dated:
By:___________________________________
M-1
150
EXHIBIT N
Subsequent Transfer Instrument
Pursuant to this Subsequent Transfer Instrument (the
"Instrument"), dated ___________, 1996, between [Xxxxxx Xxxxxxx ABS Capital I
Inc.], as seller (the "Company"), and [_________________________________], as
Trustee of the [Xxxxxx Xxxxxxx ABS Capital I Inc.] Mortgage Loan Asset-Backed
Pass-Through Certificates, Series 199__-__, as purchaser (the "Purchaser"), and
pursuant to the Pooling and Servicing Agreement, dated as of
______________________, 19____, among the Company, as company,
[_________________________________], as Master Servicer, and the ________, as
trustee (the "Pooling and Servicing Agreement"), the Company and the Purchaser
agree to the sale by the Company and the purchase by the Purchaser of the
Mortgage Loans listed on the attached Schedule of Mortgage Loans (the
"Subsequent Mortgage Loans").
Capitalized terms used and not defined herein have their
respective meanings as set forth in the Pooling and Servicing Agreement.
Section 1. CONVEYANCE OF SUBSEQUENT MORTGAGE LOANS.
(a) The Company does hereby sell, transfer, assign, set over
and convey to the Purchaser, without recourse, all of its right, title and
interest in and to the Subsequent Mortgage Loans, and including all principal
received and interest accruing on the Subsequent Mortgage Loans on and after the
related Subsequent Cut-Off Date, and all items with respect to the Subsequent
Mortgage Loans to be delivered pursuant to Section 2.03 of the Pooling and
Servicing Agreement; provided, however, that the Company reserves and retains
all right, title and interest in and to principal (including Prepayments and
Curtailments) received and interest accruing on the Subsequent Mortgage Loans
prior to the related Subsequent Cut-off Date. The Company, contemporaneously
with the delivery of this Agreement, has delivered or caused to be delivered to
the Trustee each item set forth in Section 2.03 of the Pooling and Servicing
Agreement. The transfer to the Trustee by the Company of the Subsequent Mortgage
Loans identified on the Mortgage Loan Schedule shall be absolute and is intended
by the Company, the Master Servicer, the Trustee and the Certificateholders to
constitute and to be treated as a sale by the Company.
(b) The expenses and costs relating to the delivery of the
Subsequent Mortgage Loans, this Instrument and the Pooling and Servicing
Agreement shall be borne by the Company.
(c) Additional terms of the sale are set forth on Attachment A
hereto.
Section 2. REPRESENTATIONS AND WARRANTIES; CONDITIONS
PRECEDENT. (a) The Company hereby affirms the representations and warranties set
forth in Section 3.03 of the Pooling and Servicing Agreement that relate to the
Subsequent Mortgage Loans as of the date hereof. The Company hereby confirms
that each of the conditions set forth in Section 2.08(b) of the Pooling and
Servicing Agreement are satisfied as of the date hereof and further represents
and warrants that each Subsequent Mortgage Loan complies with the requirements
of Section 2.08 (c) of the Pooling and Servicing Agreement.
(b) All terms and conditions of the Pooling and Servicing
Agreement are hereby ratified and confirmed; provided, however, that in the
event of any conflict the provisions of this Instrument shall control over the
conflicting provisions of the Pooling and Servicing Agreement.
N-1
151
Section 3. Recordation of Instrument. To the extent permitted
by applicable law, this Instrument, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions
in which any or all of the properties subject to the Mortgages are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Master Servicer at the Certificateholders' expense on
direction of the Majority Certificateholders, but only when accompanied by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders or is necessary for
the administration or servicing of the Mortgage Loans.
Section 4. Governing Law. This Instrument 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 5. Counterparts. This Instrument 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
instrument.
Section 6. Successors and Assigns. This Instrument shall inure
to the benefit of and be binding upon the Company and the Purchaser and their
respective successors and assigns.
[Signature page follows]
N-2
152
[Xxxxxx Xxxxxxx ABS Capital I Inc.]
By:_________________________________
Name:
Title:
[[Xxxxxx Xxxxxxx ABS Capital I Inc.]]
MORTGAGE LOAN ASSET-BACKED PASS-THROUGH
CERTIFICATES, Series 199__-__
[_________________________________],
as Trustee
By:_________________________________
Name:
Title:
ATTACHMENTS
A. Additional terms of the sale.
B. Schedule of Subsequent Mortgage Loans.
C. Opinions of Company's counsel (bankruptcy, corporate).
D. Company's Officer's certificate.
E. Trustee's Certificate.
F. Opinion of Trustee's Counsel.
N-3
153
EXHIBIT O
Form of Investor Representation Letter
______________, 1996
[Trustee]
[Address]
Attn:
Re: [Xxxxxx Xxxxxxx ABS Capital I Inc.] Mortgage Loan Asset-Backed
Pass-Through Certificates, Series 199__-__
Ladies and Gentlemen:
______________________ (the "Purchaser") intends to purchase
from __________________ (the "Seller"), a ____% Percentage Interest of Mortgage
Loan Asset-Backed Pass-Through Certificates, Series 199__-__, Class (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of ______________________, 19____
among [Xxxxxx Xxxxxxx ABS Capital I Inc.], as Company (the "Company"),
[_________________________________], as master servicer, and
[_________________________________], as trustee (the "Trustee"). All terms used
herein and not otherwise defined shall have the meanings set forth in the
Pooling and Servicing Agreement. The Purchaser hereby certifies, represents and
warrants to, and covenants with, the Company and the Trustee that:
1. The Purchaser understands that (a) the Certificates have
not been and will not be registered or qualified under the Securities
Act of 1933, as amended (the "Act") or any state securities law, (b)
the Company is not required to so register or qualify the Certificates,
(c) the Certificates may be resold only if registered and qualified
pursuant to the provisions of the Act or any state securities law, or
if an exemption from such registration and qualification is available,
(d) the Pooling and Servicing Agreement contains restrictions regarding
the transfer of the Certificates and (e) the Certificates will bear a
legend to the foregoing effect.
2. The Purchaser is acquiring the Certificates for its own
account for investment only and not with a view to or for sale in
connection with any distribution thereof in any manner that would
violate the Act or any applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters, and, in particular, in such matters
related to securities similar to the Certificates, such that it is
capable of evaluating the merits and risks of investment in the
Certificates, (b) able to bear the economic risks of such an investment
and (c) an "accredited investor" within the meaning of Rule 501(a)
promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and has had an
opportunity to review a copy of the Pooling and Servicing Agreement and
such other information concerning the Certificates, the Mortgage Loans
and the Company as has been requested by the Purchaser from
O-1
154
the Company or the Seller and is relevant to the Purchaser's decision
to purchase the Certificates. The Purchaser has had any questions
arising from such review answered by the Company or the Seller to the
satisfaction of the Purchaser. If the Purchaser did not purchase the
Certificates from the Seller in connection with the initial
distribution of the Certificates and was provided with a copy of the
Private Placement Memorandum (the "Memorandum") relating to the
original sale (the "Original Sale") of the Certificates by the Company,
the Purchaser acknowledges that such Memorandum was provided to it by
the Seller, that the Memorandum was prepared by the Company solely for
use in connection with the Original Sale and the Company did not
participate in or facilitate in any way the purchase of the
Certificates by the Purchaser from the Seller, and the Purchaser agrees
that it will look solely to the Seller and not to the Company with
respect to any damage, liability, claim or expense arising out of,
resulting from or in connection with (a) error or omission, or alleged
error or omission, contained in the Memorandum, or (b) any information,
development or event arising after the date of the Memorandum.
5. The Purchaser has not and will not nor has it authorized or
will it authorize any person to (a) offer, pledge, sell, dispose of or
otherwise transfer any Certificate, any interest in any Certificate or
any other similar security to any person in any manner, (b) solicit any
offer to buy or to accept a pledge, disposition of other transfer of
any Certificate, any interest in any Certificate or any other similar
security from any person in any manner, (c) otherwise approach or
negotiate with respect to any Certificate, any interest in any
Certificate or any other similar security with any person in any
manner, (d) make any general solicitation by means of general
advertising or in any other manner or (e) take any other action, that
(as to any of (a) through (e) above) would constitute a distribution of
any Certificate under the Act, that would render the disposition of any
Certificate a violation of Section 5 of the Act or any state securities
law, or that would require registration or qualification pursuant
thereto. The Purchaser will not sell or otherwise transfer any of the
Certificates, except in compliance with the provisions of the Pooling
and Servicing Agreement.
6. The Purchaser represents that either (a) or (b) is
satisfied, as marked below:
a. is not any employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the Internal Revenue Code of
1986 (the "Code"), a Person acting, directly or
indirectly, on behalf of any such plan or any Person
acquiring such Certificates with "plan assets" of a
Plan within the meaning of the Department of Labor
regulation promulgated at 29 C.F.R. ss.2510.3-101; or
b. will provide the Trustee, the Company and the Master
Servicer with either: (i) an opinion of counsel,
satisfactory to the Trustee, the Company and the
Master Servicer, to the effect that the purchase and
holding of a Certificate by or on behalf of the
Purchaser is permissible under applicable law, will
not constitute or result in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the
Code (or comparable provisions of any subsequent
enactments) and will not subject the Trustee, the
Company or the Master Servicer to any obligation or
liability (including liabilities under ERISA or
Section 4975 of the Code) in addition to those
undertaken in the Pooling and Servicing Agreement,
which opinion of counsel shall not be an expense of
the Trustee, the Company or the Master Servicer; or
(ii) in lieu of such opinion of counsel, a
certification in the form of Exhibit S to the Pooling
and Servicing Agreement.
O-2
155
[* To be inserted when Prohibited Transaction Exemption 94-29,
the individual exemption granted to [Xxxxxx Xxxxxxx ABS Capital I Inc.] by the
Department of Labor, will not exempt a transaction from the application of the
prohibited transaction provisions of ERISA and the Code.]
Very truly yours,
By:____________________________
Name:
Title:
O-3
156
EXHIBIT P
Form of Transferor Representation Letter
___________, 1996
[Trustee]
[Address]
Attn:
Re: [Xxxxxx Xxxxxxx ABS Capital I Inc.] Mortgage Loan Asset-Backed
Pass-Through Certificates, Series 199__-__
Ladies and Gentlemen:
In connection with the sale by ____________ (the "Seller") to
__________________ (the "Purchaser") of $___________ Initial Certificate
Principal Balance of Mortgage Loan Asset-Backed Pass-Through Certificates,
Series 199__-__, Class _ (the "Certificates"), issued pursuant to the Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
______________________, 19____ among [Xxxxxx Xxxxxxx ABS Capital I Inc.], as
company (the "Company"), [_________________________________], as master
servicer, and [_________________________________], as trustee (the "Trustee").
The Seller hereby certifies, represents and warrants to, and covenants with, the
Company and the Trustee that:
Neither the Seller nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, or (e) has taken any other action, that (as to any of (a) through
(e) above) would constitute a distribution of the Certificates under the
Securities Act of 1933 (the "Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Act or any state securities law, or
that would require registration or qualification pursuant thereto. The Seller
will not act in any manner set forth in the foregoing sentence with respect to
any Certificate. The Seller has not and will not sell or otherwise transfer any
of the Certificates, except in compliance with the provisions of the Pooling and
Servicing Agreement.
Very truly yours,
(Seller)
By:____________________________
Name:
Title:
P-1
157
EXHIBIT Q
[Form of Rule 144A Investment Representation]
Description of Rule 144A Securities, [Xxxxxx Xxxxxxx ABS Capital I Inc.]
including numbers: Mortgage Loan Asset-Backed
Pass-Through Certificates Series 199__-
__, Class ___, No. ___
The undersigned seller, as registered holder (the
"Transferor"), intends to transfer the Rule 144A Securities described above to
the undersigned buyer (the "Buyer").
1. In connection with such transfer and in accordance with the
agreements pursuant to which the Rule 144A Securities were issued, the
Transferor hereby certifies the following facts: Neither the Transferor nor
anyone acting on its behalf has offered, transferred, pledged, sold or otherwise
disposed of the Rule 144A Securities, any interest in the Rule 144A Securities
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities, or otherwise
approached or negotiated with respect to the Rule 144A Securities, any interest
in the Rule 144A Securities or any other similar security with, any person in
any manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action, which would constitute a
distribution of the Rule 144A Securities under the Securities Act of 1933, as
amended (the "1933 Act"), or which would render the disposition of the Rule 144A
Securities a violation of Section 5 of the 1933 Act or require registration
pursuant thereto, and that the Transferor has not offered the Rule 144A
Securities to any person other than the Buyer or another "qualified
institutional buyer" as defined in Rule 144A under the 0000 Xxx.
2. The Buyer warrants and represents to, and covenants with,
the Transferor, the Trustee and the Master Servicer pursuant to Section 5.02 of
the Pooling and Servicing Agreement as follows:
a. The Buyer understands that the Rule 144A Securities
have not been registered under the 1933 Act or the
securities laws of any state.
b. The Buyer considers itself a substantial,
sophisticated institutional investor having such
knowledge and experience in financial and business
matters that it is capable of evaluating the merits
and risks of investment in the Rule 144A Securities.
c. The Buyer has been furnished with all information
regarding the Rule 144A Securities that it has
requested from the Transferor, the Trustee or the
Master Servicer.
d. Neither the Buyer nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise
disposed of the Rule 144A Securities, any interest in
the Rule 144A Securities or any other similar
security to, or solicited any offer to buy or accept
a transfer, pledge or other disposition of the Rule
144A Securities, any interest in the Rule 144A
Securities or any other similar security from, or
otherwise approached or negotiated with respect to
the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security
Q-1
158
with, any person in any manner, or made any general
solicitation by means of general advertising or in
any other manner, or taken any other action, that
would constitute a distribution of the Rule 144A
Securities under the 1933 Act or that would render
the disposition of the Rule 144A Securities a
violation of Section 5 of the 1933 Act or require
registration pursuant thereto, nor will it act, nor
has it authorized or will it authorize any person to
act, in such manner with respect to the Rule 144A
Securities.
e. The Buyer is a "qualified institutional buyer" as
that term is defined in Rule 144A under the 1933 Act
and has completed either of the forms of
certification to that effect attached hereto as Annex
1 or Annex 2. The Buyer is aware that the sale to it
is being made in reliance on Rule 144A. The Buyer is
acquiring the Rule 144A Securities for its own
account or the account of other qualified
institutional buyers, understands that such Rule 144A
Securities may be resold, pledged or transferred only
(i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own
account or for the account of a qualified
institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance
on Rule 144A, or (ii) pursuant to another exemption
from registration under the 1933 Act.
3. The Buyer represents that either (a) or (b) is
satisfied, as marked below:
a. is not any employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the Internal Revenue Code of
1986 (the "Code"), a Person acting, directly or
indirectly, on behalf of any such plan or any Person
acquiring such Certificates with "plan assets" of a
Plan within the meaning of the Department of Labor
regulation promulgated at 29 C.F.R. ss.2510.3-101; or
b. will provide the Trustee, the Company and the Master
Servicer with either: (i) an opinion of counsel,
satisfactory to the Trustee, the Company and the
Master Servicer, to the effect that the purchase and
holding of a Certificate by or on behalf of the Buyer
is permissible under applicable law, will not
constitute or result in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the
Code (or comparable provisions of any subsequent
enactments) and will not subject the Trustee, the
Company or the Master Servicer to any obligation or
liability (including liabilities under ERISA or
Section 4975 of the Code) in addition to those
undertaken in the Pooling and Servicing Agreement,
which opinion of counsel shall not be an expense of
the Trustee, the Company or the Master Servicer; or
(ii) in lieu of such opinion of counsel, a
certification in the form of Exhibit S to the Pooling
and Servicing Agreement.
4. This document 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 document.
Q-2
159
IN WITNESS WHEREOF, each of the parties has executed this
document as of the date set forth below.
_______________________________ ___________________________________
Print Name of Transferor Print Name of Buyer
By:____________________________ By:________________________________ Name:
Name: Name:
Title: Title:
Taxpayer Identification Taxpayer Identification:
No.____________________________ No.________________________________
Date:__________________________ Date:______________________________
Q-3
160
ANNEX 1 TO EXHIBIT Q
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with
the Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or invested
on a discretionary basis $______________________(1) in securities (except for
the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Buyer satisfies the criteria in the category marked below.
-- CORPORATION, ETC. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code.
-- BANK. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by the State or
territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited
net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements.
-- SAVINGS AND LOAN. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements.
-- BROKER-DEALER. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
-- INSURANCE COMPANY. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
--------
(1) Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
Q-1-1
161
commissioner or a similar official or agency of a State,
territory or the District of Columbia.
-- STATE OR LOCAL PLAN. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
-- ERISA PLAN. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security
Act of 1974.
-- INVESTMENT ADVISER. The Buyer is an investment adviser
registered under the Investment Advisers Act of 1940.
-- SBIC. The Buyer is a Small Business Investment Company
licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of
1958.
-- BUSINESS DEVELOPMENT COMPANY. The Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940.
-- TRUST FUND. The Buyer is a trust fund whose trustee is a bank
or trust company and whose participants are exclusively (a)
plans established and maintained by a State, its political
subdivisions, or any agency or instrumentality of the State or
its political subdivisions, for the benefit of its employees,
or (b) employee benefit plans within the meaning of Title I of
the Employee Retirement Income Security Act of 1974, but is
not a trust fund that includes as participants individual
retirement accounts or H.R. 10 plans.
3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Buyer, the
Buyer used the cost of such securities to the Buyer and did not include any of
the securities referred to in the preceding paragraph. Further, in determining
such aggregate amount, the Buyer may have included securities owned by
subsidiaries of the Buyer, but only if such subsidiaries are consolidated with
the Buyer in its financial statements prepared in accordance with generally
accepted accounting principles and if the investments of such subsidiaries are
managed under the Buyer's direction. However, such securities were not included
if the Buyer is a majority-owned, consolidated subsidiary of another enterprise
and the Buyer is not itself a reporting company under the Securities Exchange
Act of 1934.
5. The Buyer acknowledges that it is familiar with Rule 144A
and understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer may be in reliance on Rule 144A.
___ ___ Will the Buyer be purchasing the Rule 144A Securities only for
Yes No the Buyer's own account?
Q-1-2
162
6. If the answer to the foregoing question is "no", the Buyer
agrees that, in connection with any purchase of securities sold to the Buyer for
the account of a third party (including any separate account) in reliance on
Rule 144A, the Buyer will only purchase for the account of a third party that at
the time is a "qualified institutional buyer" within the meaning of Rule 144A.
In addition, the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A. 7. The Buyer will notify each of
the parties to which this certification is made of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of Rule 144A Securities will constitute a reaffirmation of this
certification as of the date of such purchase.
Print Name of Buyer_________________________
By:_________________________________________
Name:
Title:
Date:
Q-1-3
163
ANNEX 2 TO EXHIBIT Q
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE
144A [For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with
the Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used.
____ The Buyer owned $___________________ in securities (other than the
excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in accordance
with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which owned in
the aggregate $______________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule
144A).
3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and certificates
of deposit, (iii) loan participations, (iv) repurchase agreements, (v)
securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that
each of the parties to which this certification is made are relying and will
continue to rely on the statements made herein because one or more sales to the
Buyer will be in reliance on Rule 144A. In addition, the Buyer will only
purchase for the Buyer's own account.
6. The undersigned will notify each of the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice, the Buyer's purchase of
Q-2-1
164
Rule 144A Securities will constitute a reaffirmation of this certification by
the undersigned as of the date of such purchase.
Print Name of Buyer__________________
By:__________________________________
Name:
Title:
IF AN ADVISER:
_____________________________________
Print Name of Buyer
Date:_________________________________
Q-2-2
165
EXHIBIT R
Premium Exhibit
For the purposes of the Pooling and Servicing Agreement dated
as of ______________________, 19____ (the "Agreement") by and among [Xxxxxx
Xxxxxxx ABS Capital I Inc.], as company, [_________________________________], as
master servicer, and [_________________________________] as trustee, "Premium
Percentage" means, with respect to any Group I Loan or Group II Loan, ____%
Terms used in this exhibit and not defined in this exhibit have the meanings
ascribed thereto in the Agreement.
R-1
166
EXHIBIT S
Form of Erisa Representation Letter
_____________, 199__
[Xxxxxx Xxxxxxx ABS Capital I Inc.]
[Address]
[Trustee]
[Address]
Attention: [Xxxxxx Xxxxxxx ABS Capital I Inc.]
Re: Mortgage Loan Asset-Backed Pass-Through Certificates, Series
199__-__, Class____
Dear Sirs:
___________________ (the "Purchaser") intends to purchase from
___________________ (the "Seller") $ _________________ Initial Certificate
Principal Balance of Mortgage Loan Asset-Backed Pass-Through Certificates,
Series 199__-__, Class ____ (the "Certificates"), issued pursuant to the Pooling
and Servicing Agreement (the"Pooling and Servicing Agreement"), dated as of
______________________, 19____, Southern Pacific Secured Assets Corp, as
company, [______________________________], as Master Servicer, and
[_________________________________], as trustee (the "Trustee"). All terms used
herein and not otherwise defined shall have the meanings set forth in the
Pooling and Servicing Agreement.
The Purchaser hereby certifies, represents and warrants to,
and covenants with the Company, the Trustee and the Master Servicer that the
following statements in either (1) or (2) are accurate:
(1) The Certificates (i) are not being acquired by, and will
not be transferred to, any employee benefit plan within the meaning of section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or other retirement arrangement, including individual retirement
accounts and annuities, Xxxxx plans and bank collective investment funds and
insurance company general or separate accounts in which such plans, accounts or
arrangements are invested, that is subject to Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986 (the "Code") (any of the foregoing, a
"Plan"), (ii) are not being acquired with "plan assets" of a Plan within the
meaning of the Department of Labor ("DOL") regulation, 29 C.F.R. ss. 2510.3-101,
and (iii) will not be transferred to any entity that is deemed to be investing
in plan assets within the meaning of the DOL regulation, 29 C.F.R. ss.
2510.3-101; or
(2) The purchase of Certificates is permissible under
applicable law, will not constitute or result in any prohibited transaction
under ERISA or Section 4975 of the Code, will not subject the Company, the
Trustee or the Master Servicer to any obligation in addition to those undertaken
in the Pooling and Servicing Agreement and, with respect to each source of funds
being used by the Purchaser to acquire the Certificates (each being referred to
as a "Source") and the following statements
S-1
167
in at least one of (a), (b), (c), (d), (e) or (f) are accurate: (a) the
Purchaser is an insurance company and (i) the Source is assets of its "general
account," (ii) the conditions set forth in PTCE 95-60 issued by the DOL have
been satisfied and the purchase and holding of Certificates by or on behalf of
the Purchaser are exempt under PTCE 95-60 and (iii) the amount of reserves and
liabilities for such general account contracts held by or on behalf of any Plan
do not exceed 10% of the total reserves and liabilities of such general account
plus surplus as of the date hereof (for purposes of this clause, all Plans
maintained by the same employer (or affiliate thereof) or employee organization
are deemed to be a single Plan) in connection with its purchase and holding of
such Certificates; or (b) the Purchaser is an insurance company and (i) the
Source is assets of its "general account," (ii) the requirements of Section
401(c) of ERISA and the DOL to be promulgated thereunder have been satisfied and
will continue to be satisfied and (c) the Purchaser represents that it
understands that the operation of the general account after __________, 199_ may
affect its ability to continue to hold the Certificates after the date which is
18 months after the 401(c) Regulations become final and unless a class exemption
issued by the DOL or an exception under Section 401(c) of ERISA is then
available for the continued holding of Certificates, if the assets of the
general account constitute Plan Assets, it will dispose of the Certificates
prior to the date which is 18 months after the 401(c) Regulations become final;
or (c) the Purchaser is an insurance company and (i) the Source is an insurance
company "pooled separate account," (ii) the conditions set forth in PTCE 90-1
issued by the DOL have been satisfied and the purchase and holding of
Certificates by or on behalf of the Purchaser are exempt under XXXX 00-0 and
(iii) there is no Plan whose assets in such separate account exceed 10% of the
total assets of such separate account as of the date hereof (for purposes of
this clause, all Plans maintained by the same employer (or any affiliate
thereof) or employee organization are deemed to be a single Plan); or (d) the
Purchaser is a bank and (i) the Source is a "collective investment fund" as
described in Section IV(e) of PTCE 91-38 with respect to which the bank is
trustee, (ii) the conditions set forth in PTCE 91-38 issued by the DOL have been
satisfied and the purchase and holding of Certificates by or on behalf of the
Purchaser are exempt under PTCE 91-38 and (iii) no Plan has assets invested in
such collective investment fund exceeding 10% of the total assets of such
collective investment fund as of the date hereof (for purposes of this clause,
all Plans maintained by the same employer (or any affiliate thereof) or employee
organization are deemed to be a single Plan); or (e) the Purchaser is an
"investment fund" described in PTCE 84-14 and (i) the undersigned is a "QPAM" as
defined in XXXX 00-00, (xx) the conditions set forth in PTCE 84-14 issued by the
DOL have been satisfied and will continue to be satisfied and (iii) the purchase
and holding of Certificates by or on behalf of the Purchaser are exempt under
PTCE 84-14; or (f) the Purchaser is an "INHAM" defined in PTCE 96-23 and (i) the
conditions set forth in PTCE 96-23 issued by the DOL have been satisfied and
will continue to be satisfied and (ii) the purchase and holding of Certificates
by or on behalf of the Purchaser are exempt under PTCE 96-23.
Very truly yours,
By:____________________________
Name:
Title:
S-2
168
EXHIBIT 4
(Please Refer to Tab 7)
