Exhibit 4.2
STANDARD TERMS
to
POOLING AND MASTER SERVICING AGREEMENT
PASS-THROUGH CERTIFICATES
AUGUST 2001 EDITION
SOUTHPOINT RESIDENTIAL MORTGAGE SECURITIES CORPORATION
TABLE OF CONTENTS
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Section Page
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RECITALS................................................................................................................... 1
ARTICLE I DEFINITIONS..................................................................................................... 1
Section 1.01 Defined Terms.......................................................................................... 1
"Accounting Date"................................................................................................ 1
"Advance"........................................................................................................ 1
"Affiliate"...................................................................................................... 1
"Annual Compliance Statement".................................................................................... 1
"ARM Loan"....................................................................................................... 1
"Asset Proceeds Account"......................................................................................... 2
"Available Distribution"......................................................................................... 2
"Basis Limit Amount"............................................................................................. 2
"Beneficial Owner"............................................................................................... 2
"Benefit Plan Affidavit":........................................................................................ 2
"Benefit Plan Opinion"........................................................................................... 2
"Book-Entry Securities".......................................................................................... 3
"Borrower"....................................................................................................... 3
"Business Day"................................................................................................... 3
"Certificate of Title Insurance"................................................................................. 3
"Class".......................................................................................................... 3
"Clearing Agency"................................................................................................ 3
"Clearing Agency Participant".................................................................................... 3
"Closing Date"................................................................................................... 3
"Code"........................................................................................................... 3
"Converted Mortgage Loan"........................................................................................ 3
"Corporate Trust Office"......................................................................................... 3
"Custodian"...................................................................................................... 3
"Cut-off Date"................................................................................................... 3
"Defect Discovery Date".......................................................................................... 3
"Deleted Mortgage Asset"......................................................................................... 4
"Directly Operate"............................................................................................... 4
"Disqualified Organization"...................................................................................... 4
"Disqualified Organization Affidavit"............................................................................ 4
"Distribution Account"........................................................................................... 4
"Distribution Date".............................................................................................. 4
"Double REMIC Series"............................................................................................ 4
"Due Period"..................................................................................................... 4
"Eligible Account"............................................................................................... 4
"ERISA".......................................................................................................... 5
"Event of Default"............................................................................................... 5
"Final Certification"............................................................................................ 5
(i)
"Fiscal Year".................................................................................................... 5
"▇▇▇▇▇▇ ▇▇▇ Guidelines".......................................................................................... 5
"Fraud Losses"................................................................................................... 5
"Holders" or "Securityholders"................................................................................... 5
"Independent Contractor"......................................................................................... 5
"Initial Certification".......................................................................................... 6
"Insurer"........................................................................................................ 6
"Interim Certification".......................................................................................... 6
"Issuing REMIC".................................................................................................. 6
"Letter of Credit"............................................................................................... 6
"Loan-to-Value Ratio"............................................................................................ 6
"Master Servicer"................................................................................................ 6
"Master Servicer Compensation"................................................................................... 6
"Master Servicer Custodial Account".............................................................................. 6
"Master Servicer Errors and Omissions Insurance Policy".......................................................... 6
"Master Servicer Fidelity Bond".................................................................................. 7
"Master Servicer Remittance Date"................................................................................ 7
"Master Servicer Reporting Date"................................................................................. 7
"Master Servicing Fee"........................................................................................... 7
"Master Servicing Fee Rate"...................................................................................... 7
"Mortgage Assets"................................................................................................ 7
"Mortgage Asset Schedule"........................................................................................ 7
"Mortgage Certificates".......................................................................................... 8
"Mortgagor Bankruptcy Losses".................................................................................... 8
"Negative Amortization Amount"................................................................................... 8
"Net Rate"....................................................................................................... 8
"New Lease"...................................................................................................... 8
"Non-Recoverable Advance"........................................................................................ 8
"Non-U.S. Person"................................................................................................ 8
"Note"........................................................................................................... 8
"Officer"........................................................................................................ 8
"Opinion of Counsel"............................................................................................. 9
"Pass-Through Rate".............................................................................................. 9
"Paying Agent"................................................................................................... 9
"Percentage Interest"............................................................................................ 9
"Permitted Investments".......................................................................................... 9
"Person"......................................................................................................... 10
"Plan"........................................................................................................... 10
"Plan Asset Regulations"......................................................................................... 10
"Plan Investor".................................................................................................. 10
"Pooling and Master Servicing Agreement"......................................................................... 10
"Pooling REMIC".................................................................................................. 10
"Pooling REMIC Subaccounts"...................................................................................... 10
"Prepayment Period".............................................................................................. 10
"Private Security"............................................................................................... 11
"Purchase Price"................................................................................................. 11
(ii)
"Purchaser"...................................................................................................... 11
"Qualification Defect"........................................................................................... 11
"Qualified Institutional Buyer".................................................................................. 11
"Qualified Substitute Mortgage Asset"............................................................................ 11
"Rating Agency".................................................................................................. 12
"Realized Interest Shortfall".................................................................................... 12
"Realized Loss".................................................................................................. 12
"Record Date".................................................................................................... 13
"Recordation Report"............................................................................................. 13
"Redeeming Purchase"............................................................................................. 13
"Redemption Account"............................................................................................. 13
"Redemption Date"................................................................................................ 13
"Redemption Price"............................................................................................... 13
"Regular Interest"............................................................................................... 13
"Regular Security"............................................................................................... 13
"REMIC".......................................................................................................... 13
"REMIC Provisions"............................................................................................... 13
"Remittance Date"................................................................................................ 13
"Remittance Report".............................................................................................. 13
"Rents From Real Property"....................................................................................... 13
"REO"............................................................................................................ 13
"REO Disposition"................................................................................................ 14
"Request for Release"............................................................................................ 14
"Reserve Fund"................................................................................................... 14
"Residual Interest".............................................................................................. 14
"Residual Security".............................................................................................. 14
"Residual Transferee Agreement".................................................................................. 14
"Rule 144A"...................................................................................................... 14
"Rule 144A Agreement"............................................................................................ 14
"Rule 144A Securities"........................................................................................... 14
"Scheduled Principal Balance".................................................................................... 14
"Securities Act"................................................................................................. 14
"Security"....................................................................................................... 14
"Security Principal Balance"..................................................................................... 14
"Security Register" and "Security Registrar"..................................................................... 15
"Seller"......................................................................................................... 15
"Senior Percentage".............................................................................................. 15
"Senior Prepayment Percentage"................................................................................... 15
"Series"......................................................................................................... 15
"Servicer"....................................................................................................... 15
"Servicing Agreement"............................................................................................ 15
"Shortfall"...................................................................................................... 15
"Soldiers' and Sailors' Shortfall"............................................................................... 15
"Special Hazard Insurance Policy"................................................................................ 15
"Special Hazard Losses".......................................................................................... 15
"Special Tax Consent"............................................................................................ 15
(iii)
"Special Tax Opinion".......................................................................................... 15
"Standard Terms"............................................................................................... 16
"Subaccount"................................................................................................... 16
"TAPRI Certificate"............................................................................................ 16
"Tax Matters Person"........................................................................................... 16
"Terminating Purchase"......................................................................................... 16
"Termination Account".......................................................................................... 16
"Termination Price"............................................................................................ 16
"Transferee Agreement"......................................................................................... 16
"Trust"........................................................................................................ 16
"Trust Estate"................................................................................................. 16
"Trustee"...................................................................................................... 17
"Trustee Mortgage Asset File".................................................................................. 17
"UCC".......................................................................................................... 18
"Unpaid Principal Balance"..................................................................................... 18
"U.S. Person".................................................................................................. 18
"Voting Rights"................................................................................................ 18
"Withholding Agent"............................................................................................ 18
ARTICLE II MORTGAGE ASSET FILES......................................................................................... 18
Section 2.01. Mortgage Asset Files............................................................................ 18
Section 2.02. Acceptance by the Trustee....................................................................... 19
Section 2.03. Purchase or Substitution of Mortgage Assets by the Seller, the Servicer or the Company.......... 22
Section 2.04. Representations and Warranties of the Company................................................... 26
Section 2.05. Representations, Warranties and Covenants of the Master Servicer................................ 28
ARTICLE III ADMINISTRATION OF THE TRUST................................................................................. 29
Section 3.01. Master Servicer Custodial Account............................................................... 29
Section 3.02. Asset Proceeds Account.......................................................................... 31
Section 3.03. Issuing REMIC Accounts.......................................................................... 32
Section 3.04. Advances by Master Servicer and Trustee......................................................... 32
Section 3.05. Month End Interest.............................................................................. 34
Section 3.06. Trustee to Cooperate; Release of Mortgage Files................................................. 34
Section 3.07. Reports to the Trustee; Annual Compliance Statements............................................ 36
Section 3.08. Title, Management and Disposition of Any REO.................................................... 37
Section 3.09. Oversight of Servicing.......................................................................... 40
ARTICLE IV REPORTING/REMITTING TO SECURITYHOLDERS....................................................................... 41
Section 4.01. Statements to Securityholders................................................................... 41
Section 4.02. Remittance Reports.............................................................................. 43
Section 4.03. Compliance with Withholding Requirements........................................................ 43
Section 4.04. Reports of Security Principal Balances to The Depository Trust Company.......................... 44
Section 4.05. Preparation of Regulatory Reports............................................................... 44
(iv)
ARTICLE V THE POOLING INTERESTS AND THE SECURITIES......................................................................... 45
Section 5.01. Pooling REMIC Interests............................................................................ 45
Section 5.02. The Securities..................................................................................... 45
Section 5.03. Book-Entry Securities.............................................................................. 46
Section 5.04. Registration of Transfer and Exchange of Securities................................................ 47
Section 5.05. Restrictions on Transfer........................................................................... 47
Section 5.06. Mutilated, Destroyed, Lost or Stolen Securities.................................................... 50
Section 5.07. Persons Deemed Owners.............................................................................. 50
Section 5.08. Appointment of Paying Agent........................................................................ 50
ARTICLE VI THE COMPANY AND THE MASTER SERVICER............................................................................. 51
Section 6.01. Liability of the Company and the Master Servicer................................................... 51
Section 6.02. Merger or Consolidation of the Company or the Master Servicer...................................... 51
Section 6.03. Limitation on Liability of the Company, the Master Servicer and Others............................. 51
Section 6.04. Resignation of the Master Servicer................................................................. 52
Section 6.05. Compensation to the Master Servicer................................................................ 52
Section 6.06. Assignment or Delegation of Duties by the Master Servicer.......................................... 52
ARTICLE VII TERMINATION OF SERVICING AND MASTERSERVICING ARRANGEMENTS...................................................... 53
Section 7.01. Termination and Substitution of Servicing Agreements............................................... 53
Section 7.02. Termination of Master Servicer; Trustee to Act..................................................... 54
Section 7.03. Notification to Securityholders.................................................................... 56
ARTICLE VIII CONCERNING THE TRUSTEE........................................................................................ 56
Section 8.01 Duties of Trustee.................................................................................. 56
Section 8.02. Certain Matters Affecting the Trustee.............................................................. 58
Section 8.03. Trustee Not Liable for Securities or Mortgage Assets............................................... 59
Section 8.04. Trustee May Own Securities......................................................................... 60
Section 8.05. Trustee's Fees and Expenses........................................................................ 60
Section 8.06. Eligibility Requirements for Trustee............................................................... 60
Section 8.07. Resignation and Removal of the Trustee............................................................. 61
Section 8.08. Successor Trustee.................................................................................. 61
Section 8.09. Merger or Consolidation of Trustee................................................................. 62
Section 8.10. Appointment of Co-Trustee or Separate Trustee...................................................... 62
Section 8.11. Appointment of Custodians.......................................................................... 63
Section 8.12. Trustee May Enforce Claims Without Possession of Certificates...................................... 63
ARTICLE IX REDEMPTION OF SECURITIES AND TERMINATION OF TRUST............................................................... 64
Section 9.01. Redemption......................................................................................... 64
Section 9.02. Termination........................................................................................ 64
Section 9.03. Procedure for Redemption or Termination............................................................ 65
Section 9.04. Additional Termination Requirements................................................................ 66
(v)
ARTICLE X REMIC TAX PROVISIONS..................................................................................... 67
Section 10.01. REMIC Administration....................................................................... 67
Section 10.02. Prohibited Activities...................................................................... 68
ARTICLE XI MISCELLANEOUS PROVISIONS................................................................................ 69
Section 11.01. Amendment of Pooling and Master Servicing Agreement........................................ 69
Section 11.02. Recordation of Agreement; Counterparts..................................................... 70
Section 11.03. Limitation on Rights of Securityholders.................................................... 70
Section 11.04. Notices.................................................................................... 71
Section 11.05. Severability of Provisions................................................................. 72
Section 11.06. Sale of Mortgage Assets.................................................................... 72
Section 11.07. Notice to Rating Agency.................................................................... 73
Exhibit A-1 Form of Initial Certification
Exhibit A-2 Form of Interim Certification
Exhibit A-3 Form of Final Certification
Exhibit B Form of Recordation Report
Exhibit C Form of Remittance Report
Exhibit D Form of Rule 144A Agreement - QIB Certification
Exhibit E Form of Transferee Agreement
Exhibit F Form of Benefit Plan Affidavit
Exhibit G Form of Residual Transferee Agreement
Exhibit H-1 Form of Non-U.S. Person Affidavit
Exhibit H-2 Form of U.S. Person Affidavit
(vi)
RECITALS
Southpoint Residential Mortgage Securities Corporation (the "Company"), a
corporation licensed to perform servicing activities (the "Master Servicer") and
a banking association or corporation as trustee (the "Trustee") have entered
into a Pooling and Master Servicing Agreement that provides for the issuance of
pass-through certificates ("Securities") that in the aggregate evidence the
entire interest in Mortgage Assets or certificates or securities evidencing an
interest therein and other property owned by the Trust created by such Pooling
and Master Servicing Agreement. These Standard Terms are a part of, and are
incorporated by reference into, the Pooling and Master Servicing Agreement.
STANDARD TERMS
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties made in the Pooling and Master Servicing
Agreement and as hereinafter set forth, the Company, the Master Servicer and the
Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.
Except as otherwise specified herein or in a Pooling and Master Servicing
Agreement or as the context may otherwise require, whenever used in this
Agreement, the following words and phrases shall have the meanings specified in
this Article. Capitalized words and phrases used herein but not defined herein
shall, when applied to a Trust, have the meanings set forth in the Servicing
Agreement(s) assigned to such Trust as in effect on the date of this Agreement.
Unless otherwise specified, all calculations described herein shall be made on
the basis of a 360-day year consisting of twelve 30-day months.
"Accounting Date": With respect to each Distribution Date, the last day of
the month preceding the month in which such Distribution Date occurs.
"Advance": As to any Mortgage Asset, any advance of principal and interest,
taxes, insurance or expenses made by a Servicer, the Master Servicer, the
Trustee or an Insurer.
"Affiliate": Any person or entity controlling, controlled by or under
common control with the Company or the Master Servicer. "Control" means the
power to direct the management and policies of a person or entity, directly or
indirectly, whether through ownership of voting securities, by contract or
otherwise. "Controlling" and "controlled" shall have meanings correlative to the
foregoing.
"Annual Compliance Statement": The Officer's Certificate required to be
delivered annually by the Master Servicer pursuant to Section 3.07 hereof.
"ARM Loan": An "adjustable rate" mortgage loan, the Note Rate of which is
subject to periodic adjustment in accordance with the terms of the Note.
"Asset Proceeds Account": The account or accounts created and maintained
for a Trust pursuant to Section 3.02 hereof.
"Available Distribution": Unless otherwise provided in the Pooling and
Master Servicing Agreement, on each Distribution Date the Available Distribution
shall equal the sum of the following:
(a) Monthly Payments due during the preceding Due Period, to the extent
paid by the Borrower or advanced by a Servicer, the Master Servicer, the Trustee
or an Insurer;
(b) all amounts deposited in the Asset Proceeds Account on account of
Mortgage Assets sold by the Trust to a Purchaser during the preceding Prepayment
Period; and
(c) all other payments (other than late charges, conversion fees and
similar charges and fees retained by a Servicer pursuant to the related
Servicing Agreement) received by the Trust in connection with any unscheduled
principal payments or recoveries on the Mortgage Assets during the preceding
Prepayment Period, including Liquidation Proceeds and Insurance Proceeds,
together with interest received on the principal portion thereof by the Trust
(including Month End Interest paid by a Servicer or the Master Servicer) through
the Accounting Date preceding the Distribution Date, less the sum of (i)
expenses associated with such recovery, and (ii) any unreimbursed Advances on
such Mortgage Assets;
minus the Servicing Fee and Master Servicing Fee allocable to each Mortgage
Asset from payments or Advances on, or proceeds of, such Mortgage Asset, and
Non-Recoverable Advances to the extent required to be reimbursed.
"Basis Limit Amount": With respect to a Mortgage Asset purchased from a
REMIC, an amount equal to the REMIC's adjusted federal income tax basis in such
Mortgage Asset as of the date on which the purchase occurs as set forth in a
certificate of an Officer of the Master Servicer, which certificate shall be
delivered to the Trustee in connection with any purchase of a Mortgage Asset.
"Beneficial Owner": With respect to a Book-Entry Security, the Person who
is registered as owner of that Security in the books of the Clearing Agency for
that Security or in the books of a Person maintaining an account with such
Clearing Agency.
"Benefit Plan Affidavit": An affidavit substantially in the form of
Exhibit F hereto.
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"Benefit Plan Opinion": An Opinion of Counsel satisfactory to the Master
Servicer and the Trustee (and upon which the Company, the Master Servicer, the
Tax Matters Person and the Trustee are authorized to rely) to the effect that
the proposed transfer will not (a) cause the assets of the Trust to be regarded
as plan assets for purposes of the Plan Asset Regulations, (b) give rise to any
fiduciary duty under ERISA, on the part of the Company, the Master Servicer, or
the Trustee or any of the Servicers, or (c) result in, or be treated as, a
prohibited transaction under Sections 406 or 407 of ERISA or Section 4975 of the
Code. Obtaining a Benefit Plan Opinion shall not be a cost or expense of the
Company, the Master Servicer, the Tax Matters Person or the Trustee.
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"Book-Entry Securities": The Classes of Securities, if any, specified as
such in the Pooling and Master Servicing Agreement for a Series.
"Borrower": The individual or individuals or any of the Servicers obligated
to repay a Mortgage Asset.
"Business Day": Any day that is not a Saturday, Sunday, holiday, or other
day on which commercial banking institutions in the city and state in which the
Corporate Trust Office (and the office of the Custodian, if any) are located are
authorized or obligated by law or executive order to be closed.
"Certificate of Title Insurance": A certificate of title insurance issued
pursuant to a master title insurance policy.
"Class": Collectively, all of the Securities bearing the same designation.
"Clearing Agency": The Depository Trust Company, or any successor
organization or any other organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended, and
the regulations of the Securities and Exchange Commission thereunder.
"Clearing Agency Participant": A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date": The date on which Securities are issued by a Trust as set
forth in the related Pooling and Master Servicing Agreement.
"Code": The Internal Revenue Code of 1986, as amended.
"Converted Mortgage Loan": An ARM Loan with respect to which the Borrower
has complied with the applicable requirements of the Note to convert the Note
Rate to a fixed rate of interest, and the related Servicer has processed such
conversion.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business shall be
administered.
"Custodian": The Trustee or the agent for the Trustee identified in the
Pooling and Master Servicing Agreement which shall hold all or a portion of the
Trustee Mortgage Asset Files with respect to a Series.
"Cut-off Date": The date specified as such in the Pooling and Master
Servicing Agreement.
"Defect Discovery Date": With respect to a Mortgage Asset, the date on
which either the Trustee or the Master Servicer first discovers a Qualification
Defect affecting the Mortgage Asset.
3
"Deleted Mortgage Asset": A Mortgage Asset replaced or to be replaced by a
Qualified Substitute Mortgage Asset.
"Directly Operate": With respect to any REO, the furnishing or rendering of
services to the tenants thereof, the management or operation of such REO, or any
use of such REO in a trade or business conducted by the Trust, in each case
other than through an Independent Contractor; provided, however, that the
Trustee or the Master Servicer on behalf of the Trust shall not be considered to
Directly Operate an REO Property solely because the Trustee or the Master
Servicer on behalf of the Trust establishes rental terms, chooses tenants,
enters into or renews leases, deals with taxes and insurance, or makes decisions
as to repairs or maintenance with respect to such REO.
"Disqualified Organization": Either (a) the United States, (b) any state or
political subdivision thereof, (c) any foreign government, (d) any international
organization, (e) any agency or instrumentality of any of the foregoing, (f) any
tax-exempt organization (other than a cooperative described in section 521 of
the Code) that is exempt from federal income tax unless such organization is
subject to tax under the unrelated business taxable income provisions of the
Code, (g) any organization described in section 1381(a)(2)(C) of the Code, or
(h) any other entity identified as a disqualified organization by the REMIC
Provisions. A corporation will not be treated as an instrumentality of the
United States or any state or political subdivision thereof if all of its
activities are subject to tax and, with the exception of the Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not selected by
such governmental unit.
"Disqualified Organization Affidavit": If provided by a Non-U.S. Person, an
affidavit substantially in the form of Exhibit H-1 hereto, and, if provided by a
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U.S. Person, an affidavit substantially in the form of Exhibit H-2 hereto.
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"Distribution Account": With respect to any Double REMIC Series, an
Eligible Account maintained by the Trustee for each Issuing REMIC. Unless
otherwise provided in the Pooling and Master Servicing Agreement, the
Distribution Account shall be considered an asset of the Issuing REMIC.
"Distribution Date": Unless otherwise provided in the Pooling and Master
Servicing Agreement, the 25th day of any month, or the next Business Day if the
25th is not a Business Day, commencing in the month following the Closing Date.
"Double REMIC Series": A Trust with respect to which two REMIC elections
are made to form the Issuing REMIC and Pooling REMIC.
"Due Period": With respect to any Distribution Date, the period commencing
on the [second] day of the calendar month preceding the calendar month in which
such Distribution Date occurs and continuing through the [first] day of the
month in which such Distribution Date occurs.
"Eligible Account": Either (a) an account or accounts maintained with a
federal or state chartered depository institution or trust company the long-term
or short-term unsecured debt obligations of which (or, in the case of a
depository institution or trust company that is the principal subsidiary of a
holding company, the long-term or short-term unsecured debt
4
obligations of such holding company) are rated by the Rating Agency in one of
its two highest long-term rating categories or one of its two highest short-term
ratings at the time any amounts are held in deposit therein, or (b) a trust
account or accounts maintained with a federal or state chartered depository
institution or trust company, acting in the capacity of a trustee, in a manner
acceptable to the Rating Agency in respect of mortgage pass-through certificates
rated in one of its two highest rating categories. Eligible Accounts may be
interest-bearing accounts or the funds therein may be invested in Permitted
Investments. If otherwise qualified by this definition, accounts maintained with
the Trustee may constitute Eligible Accounts.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"Event of Default": An event with respect to the Master Servicer, as
described in Section 7.02 hereof.
"Final Certification": A certification as to the completeness of each
Trustee Mortgage Asset File substantially in the form of Exhibit A-3 hereto
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provided by the Trustee (or the Custodian) on or before the first anniversary of
the Closing Date pursuant to Section 2.02(d) hereof.
"Fiscal Year": Unless otherwise provided in the Pooling and Master
Servicing Agreement, the fiscal year of the Trust shall run from March 1 (or
from the Closing Date, in the case of the first fiscal year) through the last
day of February.
"▇▇▇▇▇▇ ▇▇▇ Guidelines": The provisions contained in the guide for selling
and servicing first lien residential mortgage loans issued from time to time by
▇▇▇▇▇▇ Mae (formerly the Federal National Mortgage Association).
"Fraud Losses": Losses on Mortgage Assets resulting from fraud, dishonesty
or misrepresentation in the origination of such Mortgage Assets.
"Holders" or "Securityholders": The holders of the Securities, as shown on
the Security Register maintained by the Trustee.
"Independent Contractor": Either (a) any Person (other than the Trustee or
the Master Servicer) that would be an "independent contractor" with respect to
the Trust within the meaning of Section 856(d)(3) of the Code if the Trust were
a real estate investment trust (except that, in applying that Section, more than
35% of the outstanding principal balance of any Class shall be deemed to be more
than 35% of the certificates of beneficial interest of the Trust), so long as
the Trust does not receive or derive any income from such Person, the
relationship between such Person and the Trust is at arm's length and such
Person is not an employee of the Trust, the Trustee or the Master Servicer, all
within the meaning of Treasury Regulation Section 1.856-4(b)(5), or (b) any
other Person (including the Trustee or the Master Servicer) upon receipt by the
Trustee of an Opinion of Counsel, the expense of which shall constitute an
Advance if borne by the Servicer or any sub-Servicer, to the effect that the
taking of any action in respect of any REO by such Person, subject to any
conditions therein specified, that is otherwise herein contemplated to be taken
by an Independent Contractor will not cause such REO to cease to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code
(determined without regard to the exception applicable for purposes of Section
860D(a) of the
5
Code), or cause any income realized in respect of such REO to fail to qualify as
Rents from Real Property.
"Initial Certification": A certification as to the completeness of each
Trustee Mortgage Asset File substantially in the form of Exhibit A-1 hereto
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provided by the Trustee (or the Custodian) on the Closing Date pursuant to
Section 2.02(b) hereof.
"Insurer": Any issuer of an insurance policy relating to the Mortgage
Assets or Securities of a Series.
"Interim Certification": A certification as to the completeness of each
Trustee Mortgage Asset File substantially in the form of Exhibit A-2 hereto
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provided by the Trustee (or the Custodian) within 45 days of the Closing Date
pursuant to Section 2.02(c) hereof.
"Issuing REMIC": With respect to any Double REMIC Series, if so provided in
the Pooling and Master Servicing Agreement, the REMIC consisting primarily of
Regular Interests in the Pooling REMIC.
"Letter of Credit": A letter of credit issued to the Trustee and its
successors or assigns by any Person whose long-term unsecured debt obligations
are rated in one of the two highest rating categories of each Rating Agency.
"Loan-to-Value Ratio": For purposes of the REMIC Provisions, the ratio that
results when the Unpaid Principal Balance of a mortgage loan is divided by the
fair market value of the Mortgaged Premises (or, in the case of a mortgage loan
that is secured by a leasehold interest, the fair market value of the leasehold
interest and any improvements thereon). For purposes of determining that ratio,
the fair market value of the Mortgage Premises (or leasehold interest, as the
case may be) must be reduced by (i) the full amount of any lien on the Mortgaged
Premises (or leasehold interest, as the case may be) that is senior to the
mortgage loan and (ii) a pro rata portion of any lien that is in parity with the
mortgage loan.
"Master Servicer": Unless otherwise specified in the Pooling and Master
Servicing Agreement, a national banking association, or any successor thereto as
master servicer of the Trust.
"Master Servicer Compensation": The Master Servicing Fee and additional
compensation as specified in Section 6.05.
"Master Servicer Custodial Account": The account described in Section 3.01
hereof. Subject to the provisions of the Pooling and Master Servicing Agreement,
the owner of the Master Servicer Custodial Account is the Master Servicer. To
the extent provided in the REMIC Provisions or proposed, temporary, or final
Treasury regulations, any amounts transferred to the Master Servicer Custodial
Account shall be treated as amounts distributed by the REMIC or Pooling REMIC to
the Master Servicer. The Master Servicer Custodial Account shall not be
considered an asset of the Trust or any REMIC.
"Master Servicer Errors and Omissions Insurance Policy": Insurance coverage
in an amount and otherwise in form and substance acceptable under ▇▇▇▇▇▇ ▇▇▇
Guidelines, insuring
6
the Master Servicer as the named insured against liability for damages arising
out of errors, omissions or mistakes committed in the performance of the
services and other obligations required of the Master Servicer hereunder and, if
permitted by the issuer of such policy, naming the Trustee as an additional
insured, containing a severability of interests provision, but no other
exclusion or other provision that would limit the liability of any insured to
any other insured.
"Master Servicer Fidelity Bond": A fidelity bond issued by an insurer and
in form and substance acceptable under ▇▇▇▇▇▇ Mae Guidelines, under which such
insurer (a) agrees to indemnify the Master Servicer for all losses sustained as
a result of any theft, embezzlement, fraud or other dishonest act on the part of
the Master Servicer's directors, officers or employees, and (b) provides for
limits of liability under such bond for each director, officer or employee of
not less than an amount required by such guidelines.
"Master Servicer Remittance Date": Unless otherwise provided in the Pooling
and Master Servicing Agreement, (i) the Distribution Date, if the Master
Servicer Custodial Account and Asset Proceeds Account are maintained at the same
bank, or (ii) the Business Day immediately preceding each Distribution Date, if
such Accounts are not maintained at the same bank.
"Master Servicer Reporting Date": Unless otherwise provided in the Pooling
and Master Servicing Agreement, the date that is no later than the close of
business on the second Business Day prior to each Distribution Date.
"Master Servicing Fee": Unless otherwise provided in the Pooling and Master
Servicing Agreement, in any month, an amount equal to one-twelfth of the Master
Servicing Fee Rate multiplied by the aggregate Scheduled Principal Balance of
the Mortgage Assets as of the Due Date preceding a Distribution Date without
taking into account any payment of principal due or made on such Due Date.
"Master Servicing Fee Rate": The rate specified as such in the Pooling and
Master Servicing Agreement.
"Mortgage Assets": The Mortgage Certificates and mortgage loans sold by the
Company to the Trust as listed on the Mortgage Asset Schedule to the Pooling and
Master Servicing Agreement, and any mortgage asset substituted therefor.
"Mortgage Asset Schedule": The list of Mortgage Assets sold by the Company
to the Trust, which Schedule is attached to the Pooling and Master Servicing
Agreement, and which shall set forth for each Mortgage Asset that is a mortgage
loan the following information:
(a) the Servicer (Company) Loan Number;
(b) the Borrower's Name;
(c) the original principal balance; and
(d) the Scheduled Principal Balance as of the Cut-off Date;
7
together with such additional information as may be reasonably requested by the
Trustee.
"Mortgage Certificates": With respect to a Series, the GNMA Certificates,
the FHLMC Certificates, the ▇▇▇▇▇▇ ▇▇▇ Certificates and the Other Mortgage
Certificates securing such Series.
"Mortgagor Bankruptcy Losses": Losses resulting from any court ordered
reduction in the valuation of Mortgaged Premises or changes in the repayment
terms of a Mortgage Asset in conjunction with a bankruptcy proceeding of a
Borrower or otherwise.
"Negative Amortization Amount": As to a Mortgage Asset, the excess, if any,
of interest accrued at the Note Rate for any month over the greater of (a) the
amount of the Monthly Payment for such month and (b) the interest received in
respect of such month.
"Net Rate": Unless otherwise provided in the Pooling and Master Servicing
Agreement, with respect to each Mortgage Asset that is a mortgage loan, the Note
Rate of that Mortgage Asset less the sum of the Servicing Fee Rate and the
Master Servicing Fee Rate applicable thereto.
"New Lease": Any lease of REO entered into on behalf of the Trust,
including any lease renewed, modified or extended on behalf of the Trust (if the
Trustee, the Master Servicer, the Servicer or an agent of the foregoing, has the
right to renegotiate the terms of such lease).
"Non-Recoverable Advance": Any Advance or proposed Advance that the Master
Servicer or the Trustee, as the case may be, has determined not to be
recoverable in accordance with Section 3.04 hereof.
"Non-U.S. Person": A foreign person within the meaning of Treasury
regulation Section 1.860G-3(a)(1) (i.e., a person other than (a) a citizen or
resident of the United States, (b) a corporation or partnership that is
organized under the laws of the United States or any jurisdiction thereof or
therein, or (c) an estate or trust that is subject to United States federal
income taxation regardless of the source of its income) who would be subject to
United States income tax withholding pursuant to Section 1441 or 1442 of the
Code on income derived from a Residual Interest.
"Note": A manually executed written instrument evidencing the Borrower's
promise to repay a stated sum of money, plus interest, to the holder of the Note
by a specific date according to a schedule of principal and interest payments.
"Officer": When used with respect to the Trustee, any senior vice
president, any vice president, any assistant vice president, any assistant
treasurer, any trust officer, any assistant secretary in the Corporate Trust
Office of the Trustee, or any other officer of the Trustee customarily
performing functions similar to those performed by the persons who at the time
shall be such officers, and also to whom with respect to a particular corporate
trust matter such matter is referred because of such officer's knowledge of and
familiarity with the particular subject. With respect to any other Person, the
chairman of the board, the president, a vice president (however designated), the
treasurer or controller.
8
"Opinion of Counsel": A written opinion of counsel, who may be
counsel for the Company or the Master Servicer, acceptable to the Trustee and
the Master Servicer. Except with the consent of each Rating Agency, no Opinion
of Counsel may be delivered by in-house counsel of the entity required to
deliver such opinion.
"Pass-Through Rate": With respect to the Securities, as to each
Distribution Date, the rate specified as such in the Pooling and Master
Servicing Agreement.
"Paying Agent": The paying agent appointed pursuant to Section 5.08
hereof.
"Percentage Interest": With respect to any Security to which
principal is assigned as of the Closing Date, the portion of the Class evidenced
by such Security, expressed as a percentage, the numerator of which is the
initial Security Principal Balance of such Security and the denominator of which
is the aggregate Security Principal Balance of all of the Securities of such
Class as of the Closing Date. With respect to any Security to which a principal
balance is not assigned as of the Closing Date, the portion of the Class
evidenced by such Security, expressed as a percentage, as stated on the face of
such Security.
"Permitted Investments": Permitted Investments shall consist of the
following:
(a) direct obligations of, or obligations fully guaranteed as to
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;
(b) senior debt obligations and mortgage participation certificates of
▇▇▇▇▇▇ Mae (formerly the Federal National Mortgage Association) or the Federal
Home Loan Mortgage Corporation;
(c) repurchase obligations (the collateral for which is held by a
third party or the Trustee) with respect to any security described in clauses
(a) or (b) above, provided that the long-term or short-term unsecured debt
obligations of the party agreeing to repurchase such obligations are at the time
rated by the Rating Agency in one of its two highest long-term unsecured debt
rating categories or one of its two highest short-term unsecured debt ratings;
(d) money market funds rated in the highest long-term rating category;
(e) certificates of deposit, time deposits and bankers' acceptances of
any bank or trust company (including the Trustee) incorporated under the laws of
the United States or any state, provided that the long-term unsecured debt
obligations of such bank or trust company at the date of acquisition thereof
(or, in the case of the principal depository institution in a depository
institution holding company, the long-term unsecured debt obligations of the
depository institution holding company) have been rated by the Rating Agency in
one of its two highest long-term unsecured debt rating categories;
(f) commercial paper (having original maturities of not more than 365
days) of any corporation incorporated under the laws of the United States or any
state thereof which on the date of acquisition has been rated by the Rating
Agency in its highest short-term unsecured debt
9
rating available (i.e., "P-1" by ▇▇▇▇▇'▇ Investors Service, "A-1+" by Standard &
Poor's Corporation and "F-1+" by Fitch Investors Service, Inc.); and
(g) any other demand, money market or time deposit or obligation, or
interest-bearing or other security or investment as would not affect the then
current rating of the Securities by any Rating Agency;
provided, however, that no investment described above shall constitute a
Permitted Investment if such investment evidences either the right to receive
(i) only interest with respect to the obligations underlying such instrument or
(ii) both principal and interest payments derived from obligations underlying
such instrument if the interest and principal payments with respect to such
instrument provide a yield to maturity at par greater than 120% of the yield to
maturity at par of the underlying obligations; and provided further, that no
investment described above shall constitute a Permitted Investment unless such
investment matures no later than the Business Day immediately preceding the
Distribution Date on which the funds invested therein are required to be
distributed (or, in the case of an investment that is an obligation of the
institution in which the account is maintained, no later than such Distribution
Date).
"Person": Any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan": Any employee benefit plan or retirement arrangement,
including individual retirement accounts and annuities, ▇▇▇▇▇ plans and
collective investment funds in which such plans, accounts, annuities or
arrangements are invested, that are described in or subject to the Plan Asset
Regulations, ERISA or corresponding provisions of the Code.
"Plan Asset Regulations": The Department of Labor regulations set
forth in 29 C.F.R. (S) 2510.3-101, as amended from time to time.
"Plan Investor": Any Plan, any Person acting on behalf of a Plan or
any Person using the assets of a Plan.
"Pooling and Master Servicing Agreement": The Pooling and Master
Servicing Agreement among the Company, the Master Servicer and the Trustee
relating to the issuance of Securities, and into which these Standard Terms are
incorporated by reference.
"Pooling REMIC": With respect to any Double REMIC Series, if so
provided in the Pooling and Master Servicing Agreement, the REMIC consisting
primarily of Mortgage Assets and the Asset Proceeds Account.
"Pooling REMIC Subaccounts": With respect to any Double REMIC Series,
the accounts established by the Trustee that represent the Regular Interests in
the Pooling REMIC.
"Prepayment Period": With respect to each Distribution Date, the
calendar month preceding the month in which such Distribution Date occurs.
10
"Private Security": Any Class of Securities designated as such in the
Pooling and Master Servicing Agreement.
"Purchase Price": With respect to a Mortgage Asset purchased from the
Trust, an amount equal to the Unpaid Principal Balance of the Mortgage Asset,
plus accrued and unpaid interest thereon at the Note Rate to the last day of the
month in which the purchase occurs, and, if the Servicer is the Purchaser, less
any unreimbursed Advances of principal and interest made by the Servicer on such
Mortgage Asset and any outstanding Servicing Fee owed with respect to such
Mortgage Asset.
"Purchaser": The Person that purchases a Mortgage Asset from the
Trust pursuant to Section 2.03 hereof.
"Qualification Defect": With respect to a Mortgage Asset, (a) a
defective document in the Trustee Mortgage Asset File, (b) the absence of a
document in the Trustee Mortgage Asset File, or (c) the breach of any
representation, warranty or covenant with respect to the Mortgage Asset made by
the Seller, Servicer or the Company but only if the affected Mortgage Asset
would cease to qualify as a "qualified mortgage" for purposes of the REMIC
Provisions. With respect to a REMIC Regular Interest or a mortgage certificate
described in Section 860G(a)(3) of the Code, the failure to qualify as a
"qualified mortgage" for purposes of the REMIC Provisions.
"Qualified Institutional Buyer": Any "qualified institutional buyer"
as defined in clause (a)1 of Rule 144A.
"Qualified Substitute Mortgage Asset": A Mortgage Asset substituted
by the Company or a Seller for a Deleted Mortgage Asset which must, on the date
of such substitution, (a) have an Unpaid Principal Balance not greater than (and
not more than $10,000 less than) the Unpaid Principal Balance of the Deleted
Mortgage Asset, (b) have a Note Rate not less than (and not more than one
percentage point in excess of) the Note Rate of the Deleted Mortgage Asset, (c)
have a Net Rate equal to the Net Rate of the Deleted Mortgage Asset, (d) have a
remaining term to maturity not greater than (and not more than one year less
than) that of the Deleted Mortgage Asset, (e) have a Loan-to-Value ratio as of
the first day of the month in which the substitution occurs equal to or less
than the Loan-to-Value ratio of the Deleted Mortgage Asset as of such date (in
each case, using the Value at origination, and after taking into account the
Monthly Payment due on such date), and (f) comply with each representation and
warranty set forth in Section 2.04 and, if the Seller is effecting the
substitution, comply with each representation and warranty set forth in the
Sales Agreement. In addition, no ARM Loan may be substituted unless the Deleted
Mortgage Asset is an ARM Loan, in which case, the substituted Mortgage Asset
must also (i) have a Minimum Lifetime Note Rate that is not less than the
Minimum Lifetime Note Rate on the Deleted Mortgage Asset, (ii) have a Maximum
Lifetime Note Rate that is not less than the Maximum Lifetime Note Rate on the
Deleted Mortgage Asset, (iii) provide for a lowest possible Net Rate that is not
lower than the lowest possible Net Rate for the Deleted Mortgage Asset and a
highest possible Net Rate that is not lower than the highest possible Net Rate
for the Deleted Mortgage Asset, (iv) have a Gross Margin not less than the Gross
Margin of the Deleted Mortgage Asset, (v) have a Periodic Rate Cap equal to the
Periodic Rate Cap on the Deleted Mortgage Asset, (vi) have a next Interest
Adjustment Date that is the same as the next Interest Adjustment Date for the
Deleted Mortgage Asset or occurs not more than two months
11
prior to the next Interest Adjustment Date for the Deleted Mortgage Asset, (vii)
not have a permitted increase or decrease in the Monthly Payment on each Payment
Adjustment Date less than the permitted increase or decrease applicable to the
Deleted Mortgage Asset, and (viii) not be a Mortgage Asset convertible from a
variable to a fixed Note Rate unless the Deleted Mortgage Asset is so
convertible. In the event that more than one Mortgage Asset is substituted for a
Deleted Mortgage Asset, the amount described in clause (a) hereof shall be
determined on the basis of aggregate Unpaid Principal Balances, the rates
described in clauses (c), (i), (ii), and (iii) hereof shall be determined on the
basis of weighted average Note Rates and Net Rates, as the case may be, the term
described in clause (d) hereof shall be determined on the basis of weighted
average remaining terms to maturity, provided that no Qualified Substitute
Mortgage Asset may have an original term to maturity beyond the latest original
term to maturity of any Mortgage Asset assigned to the Trust on the Closing
Date, the Gross Margins described in clause (iv) hereof shall be determined on
the basis of weighted average Gross Margins, and the Interest Adjustment Dates
described in clause (vi) hereof shall be determined on the basis of weighted
average Interest Adjustment Dates. In the case of a Trust for which a REMIC
election has been or will be made, a Qualified Substitute Mortgage Asset also
shall satisfy the following criteria as of the date of its substitution for a
Deleted Mortgage Asset: (A) the Borrower shall not be 90 or more days delinquent
in payment on the Qualified Substitute Mortgage Asset; (B) the Trustee Mortgage
Asset File for such Mortgage Asset shall not contain any material deficiencies
in documentation, and shall include an executed Note and a recorded Security
Instrument; (C) the Loan-to-Value Ratio of the Mortgage Asset must be 125% or
less either (1) on the date of origination of the Mortgage Asset, or, if any of
the terms of such Mortgage Asset were modified other than in connection with a
default or imminent default on such Mortgage Asset, on the date of such
modification, or (2) on the date of the substitution, based on an appraisal
conducted within the 60 day period prior to the date of the substitution; (D) no
property securing such Mortgage Asset may be subject to foreclosure, bankruptcy,
or insolvency proceedings; and (E) such Mortgage Asset must be secured by a
valid first lien on the related Mortgaged Premises.
"Rating Agency": Any nationally recognized statistical rating agency,
or its successor, that on the Closing Date rated one or more Classes of the
Securities at the request of the Company. If such agency or a successor is no
longer in existence, the "Rating Agency" shall be such nationally recognized
statistical rating agency, or other comparable Person, designated by the
Company, notice of which designation shall be given to the Trustee and the
Master Servicer. References herein to any long-term rating category of a Rating
Agency shall mean such rating category without regard to any plus or minus or
numerical designation.
"Realized Interest Shortfall": With respect to a Mortgage Asset, the
amount by which the interest payable thereon exceeds the net amount recovered
(including Insurance Proceeds) in Liquidation thereof, after payment of expenses
of Liquidation and reimbursement of any Advances made with respect to such
Mortgage Asset.
"Realized Loss": With respect to any Mortgage Asset, (a) the amount
by which the Unpaid Principal Balance thereof exceeds the net amount recovered
in Liquidation thereof (after payment of expenses of Liquidation), after payment
of accrued interest on the Mortgage Asset and after application of any Insurance
Proceeds with respect thereto, and (b) any other types of principal loss,
including but not limited to, Mortgagor Bankruptcy Losses, Special Hazard Losses
and Fraud Losses with respect thereto.
12
"Record Date": Unless otherwise provided in the Pooling and Master
Servicing Agreement, with respect to each Distribution Date, the last Business
Day of the month immediately preceding the month in which such Distribution Date
occurs.
"Recordation Report": A report substantially in the form of Exhibit B
---------
hereto provided by the Trustee (or the Custodian) pursuant to Section 2.02(f)
hereof identifying those Mortgage Assets for which a Security Instrument or an
Assignment remains unrecorded.
"Redeeming Purchase": The purchase of all of the Regular Securities
issued by a Trust pursuant to Section 9.01 hereof.
"Redemption Account": An escrow account maintained by the Trustee
into which any Trust funds not distributed on a Distribution Date on which a
Redeeming Purchase is made are deposited. The Redemption Account shall be an
Eligible Account.
"Redemption Date": The date, if any, specified in the Pooling and
Master Servicing Agreement for a Series.
"Redemption Price": An amount equal to (a) the Security Principal
Balance of the Regular Securities (and any Residual Securities with a Security
Principal Balance) and accrued and unpaid interest due thereon to the Accounting
Date preceding the Distribution Date fixed for redemption and (b) unreimbursed
Advances and Non-Recoverable Advances.
"Regular Interest": An interest in a REMIC that is designated in the
Pooling and Master Servicing Agreement as a "regular interest" under the REMIC
Provisions.
"Regular Security": Any Security other than a Residual Security and
that represents a Regular Interest in a REMIC or a combination of Regular
Interests in a REMIC.
"REMIC": With respect to each Trust, each real estate mortgage
investment conduit, within the meaning of the REMIC Provisions, for such Trust.
"REMIC Provisions": Provisions of the Code relating to real estate
mortgage investment conduits, which appear at sections 860A through 860G of the
Code, related Code provisions, and regulations, announcements and rulings
thereunder, as the foregoing may be in effect from time to time.
"Remittance Date": The 18th day of each month, or the preceding
Business Day if the 18th is not a Business Day.
"Remittance Report": A report (either a data file or hard copy) that
is prepared by the Master Servicer and contains the information specified in
Exhibit C attached hereto.
---------
"Rents From Real Property": With respect to any REO, gross income of
the character described in Code section 856(d) and Treasury regulations
thereunder.
"REO": A Mortgaged Premises acquired by a Servicer on behalf of the
Securityholders through foreclosure or deed-in-lieu of foreclosure, as further
described in Section 3.08 hereof.
13
"REO Disposition": The receipt by the Servicer of Insurance Proceeds
and other payments and recoveries (including Liquidation Proceeds) which the
Servicer recovers from the sale or other disposition of an REO.
"Request for Release": A release signed by an Officer of the Servicer
in the form attached to the Servicing Agreement as the Company Form 340 (or a
similar certificate of the Master Servicer containing the same information).
"Reserve Fund": Unless otherwise provided in the Pooling and Master
Servicing Agreement, any fund in the Trust Estate other than (a) the Asset
Proceeds Account and (b) any other fund that is expressly excluded from a REMIC.
"Residual Interest": An interest in a REMIC that is designated as a
"residual interest" under the REMIC Provisions.
"Residual Security": Any one of the Securities designated as such in
the Pooling and Master Servicing Agreement.
"Residual Transferee Agreement": An agreement substantially in the
form of Exhibit G hereto.
---------
"Rule 144A": Rule 144A promulgated by the Securities and Exchange
Commission, as the same may be amended from time to time.
"Rule 144A Agreement": An agreement substantially in the form of
Exhibit D hereto.
---------
"Rule 144A Securities": Any Class of Securities designated as such in
the Pooling and Master Servicing Agreement.
"Scheduled Principal Balance": For a Mortgage Asset as of any date of
determination, the scheduled principal balance thereof as of the Cut-off Date,
increased by the amount of negative amortization, if any, with respect thereto,
and reduced by (a) the principal portion of all Monthly Payments due on or
before such determination date, whether or not paid by the Borrower or advanced
by a Servicer, the Master Servicer, the Trustee or an Insurer, (b) all amounts
allocable to unscheduled principal payments received on or before the last day
of the Prepayment Period preceding such date of determination, and (c) without
duplication, the amount of any Realized Loss that has occurred with respect to
such Mortgage Asset.
"Securities Act": The Securities Act of 1933, as amended.
"Security": Any Security designated in the Pooling and Master
Servicing Agreement.
"Security Principal Balance": With respect to each Class of
Securities, on any Distribution Date, the aggregate principal amount, if any, of
such Class of Securities immediately prior to such Distribution Date (or in the
case of the first Distribution Date, an amount equal to the aggregate initial
principal amount of such Class of Securities as of the Closing Date) net of the
sum of (a) the amounts to be applied on such Distribution Date to reduce the
aggregate principal amount of such Class of Securities in accordance with the
Pooling and
14
Master Servicing Agreement, and (b) the aggregate of all Realized Losses, if
any, to be allocated to such Class of Securities on such Distribution Date
pursuant to the Pooling and Master Servicing Agreement.
"Security Register" and "Security Registrar": The register maintained
and the registrar appointed pursuant to Section 5.02 hereof.
"Seller": With respect to each Mortgage Asset, the Person that
executed a Sales Agreement applicable to such Mortgage Asset.
"Senior Percentage": The percentage, if any, calculated as set forth
in the Pooling and Master Servicing Agreement.
"Senior Prepayment Percentage": The percentage, if any, calculated as
set forth in the Pooling and Master Servicing Agreement.
"Series": A group of Securities issued by a separate Trust.
"Servicer": The Servicer or Servicers identified in the Servicing
Agreement.
"Servicing Agreement": The Servicing Agreement or Agreements
identified in the Pooling and Master Servicing Agreement.
"Shortfall": Month End Interest Shortfall and Soldiers' and Sailors'
Shortfall.
"Soldiers' and Sailors' Shortfall": Interest losses on a Mortgage
Asset resulting from application of the Soldiers' and Sailors' Civil Relief Act
of 1940.
"Special Hazard Insurance Policy": An insurance policy covering a
Mortgage Asset against (i) loss by reason of damage to Mortgaged Premises caused
by certain hazards not covered by any Hazard Insurance Policy and (ii) partial
loss from damage to the Mortgaged Premises caused by reason of the application
of the coinsurance clause contained in any Hazard Insurance Policy.
"Special Hazard Losses": Losses on Mortgage Assets arising out of
damage to the Mortgaged Premises that are not covered by Standard Hazard
Insurance Policies, but do not include losses caused by war, nuclear reaction,
nuclear or atomic weapons, insurrection or wear and tear.
"Special Tax Consent": The written consent of the Holder of a
Residual Security to any tax (or risk thereof) arising out of a proposed
transaction or activity that may be imposed upon such Holder or that may affect
adversely the value of such Holder's Residual Security.
"Special Tax Opinion": An Opinion of Counsel that a proposed
transaction or activity will not (a) affect adversely the status of any REMIC as
a REMIC or of the Regular Interests as the "regular interests" therein under the
REMIC Provisions, (b) affect the payment of interest or principal on the Regular
Interests, or (c) result in the encumbrance of the Mortgage Assets by a tax
lien.
15
"Standard Terms": These Standard Terms, as amended or supplemented,
incorporated by reference in a Pooling and Master Servicing Agreement.
"Subaccount": With respect to any Double REMIC Series, each of the
Subaccounts of the Distribution Account that is established by the Trustee
solely for purposes of the REMIC Provisions. Unless otherwise provided in the
Pooling and Master Servicing Agreement, the Subaccounts shall be Regular
Interests in the Pooling REMIC and assets of the Issuing REMIC.
"TAPRI Certificate": A certificate signed by the transferor of a
Residual Security stating whether such Security has "tax avoidance potential" as
defined in Treasury regulations section 1.860G-3(a)(2).
"Tax Matters Person": The Person or Persons designated from time to
time hereunder to act as tax matters person (within the meaning of the REMIC
Provisions) of a REMIC.
"Terminating Purchase": The purchase of all Mortgage Assets and each
REO owned by a Trust pursuant to Section 9.02 hereof.
"Termination Account": An escrow account maintained by the Trustee
into which any Trust funds not distributed on the Distribution Date on which the
earlier of (a) a Terminating Purchase or (b) the final payment or other
Liquidation of the last Mortgage Asset remaining in the Trust or the disposition
of the last REO remaining in the Trust is made are deposited. The Termination
Account shall be an Eligible Account.
"Termination Price": The greater of (a) 100% of the Unpaid Principal
Balance of each Mortgage Asset remaining in the Trust on the day of such
purchase, plus accrued interest thereon at the Note Rate through the Accounting
Date preceding repurchase plus (i) unreimbursed Advances of other than principal
and interest, and (ii) the lesser of (A) the Unpaid Principal Balance of the
Mortgage Asset for any REO remaining in the Trust, plus accrued interest thereon
at the Note Rate to the Accounting Date preceding repurchase and (B) the current
appraised value of any such REO, such appraisal to be conducted by an appraiser
satisfactory to the Master Servicer (net of liquidation expenses to be incurred
in connection with the disposition of such REO, estimated in good faith by the
Master Servicer), and (b) the sum of the aggregate fair market value of all of
the assets of the Trust (as determined by the Master Servicer based upon bids
from at least three recognized broker/dealers that deal in similar assets as of
the close of business on the third Business Day preceding the date upon which
notice of any such termination is furnished to Securityholders pursuant to
Section 9.03). The fair market value of the assets in a Trust or the appraised
value of any REO shall be based upon the inclusion of accrued interest to the
Accounting Date preceding repurchase at the applicable Note Rate on the
Scheduled Principal Balance of each Mortgage Asset (including any Mortgage Asset
which became an REO as to which an REO Disposition has not occurred).
"Transferee Agreement": An agreement substantially in the form of
Exhibit E hereto.
---------
"Trust": The trust formed pursuant to a Pooling and Master Servicing
Agreement.
"Trust Estate": The segregated pool of assets sold and assigned to
the Trustee by the Company pursuant to the conveyance clause of any Trust.
16
"Trustee": The bank or trust company identified as the Trustee in the
Pooling and Master Servicing Agreement.
"Trustee Mortgage Asset File": With respect to each Mortgage Asset, unless
otherwise provided in the Pooling and Master Servicing Agreement, collectively,
the following documents [(if applicable)], together with any other Mortgage
Asset documents held by the Trustee or Custodian with respect to such Mortgage
Asset:
(a) the original Note, endorsed in blank or in the following form:
"WITHOUT RECOURSE, PAY TO THE ORDER OF, AS TRUSTEE u/a DATED AS OF
____________________" with all prior and intervening endorsements as may be
necessary to show a complete chain of endorsements from the originator to the
Trustee and any related power of attorney, surety or guaranty agreement, Note
Assumption Rider or buydown agreement; provided, however, that if the original
Note is endorsed in blank, such endorsement shall be completed by the Trustee or
Custodian in the above form within 30 days of the Closing Date, with all costs
of completion of such endorsement being borne by the Seller;
(b) the original recorded Security Instrument with evidence of recordation
noted thereon or attached thereto, together with any addenda or riders thereto
or a copy of such recorded Security Instrument with such evidence of recordation
certified to be true and correct by the appropriate governmental recording
office or, if the original Security Instrument has been submitted for
recordation but has not been returned from the applicable public recording
office, a photocopy of the Security Instrument certified by an Officer of the
Seller or by the title insurance company providing title insurance in respect of
such Security Instrument, the closing/settlement - escrow agent or the closing
attorney to be a true and complete copy of the original Security Instrument
submitted for recordation;
(c) an original Assignment of the Security Instrument (pursuant to the
directions of the Company) in blank or to "__________________, AS TRUSTEE u/a
WITH SOUTHPOINT RESIDENTIAL MORTGAGE SECURITIES CORPORATION AND _______________
DATED AS OF [DATE OF POOLING AND MASTER SERVICING AGREEMENT]" with evidence of
recording noted thereon or attached thereto, or a copy of such Assignment with
such evidence of recordation certified to be true and correct by the appropriate
governmental recording office, or if such original Assignment has been submitted
for recordation but has not been returned from the applicable public recording
office, a photocopy of such Assignment certified by an Officer of the Seller to
be a true and complete copy of the Assignment submitted for recordation;
provided, however, that if the original Assignment of the Security Instrument is
in blank, such assignment shall be completed by the Trustee or Custodian in the
above form within 30 days of the Closing Date, with all costs of completion of
such Assignment being borne by the Seller;
(d) each original recorded intervening Assignment of the Security
Instrument as may be necessary to show a complete chain of title from the
originator to the Trustee, with evidence of recordation noted thereon or
attached thereto, or a copy of such Assignment with such evidence of recordation
certified to be true and correct by the appropriate governmental recording
office or, if any such Assignment has been submitted for recordation but has not
been returned from the applicable public recording office or is not otherwise
available, a copy of such
17
Assignment certified by an Officer of the Seller to be a true and complete copy
of the recorded Assignment or the Assignment submitted for recordation;
(e) an original Title Insurance Policy, Certificate of Title Insurance or
a written commitment to issue such a Title Insurance Policy or Certificate of
Title Insurance, or a copy of such Title Insurance Policy or such Certificate of
Title Insurance certified as true and correct by the applicable Title Insurance
company; and
(f) if indicated on a Schedule to the Pooling and Master Servicing
Agreement (or otherwise received by the Trustee or the Custodian), the original
or certified copies of each assumption agreement, modification agreement,
written assurance or substitution agreement, if any.
"UCC": The Uniform Commercial Code as in effect in the jurisdiction that
governs the interpretation of the substantive provisions of the Pooling and
Master Servicing Agreement.
"Unpaid Principal Balance": With respect to a Mortgage Asset, the
outstanding principal balance payable by the Borrower under the terms of the
Note.
"U.S. Person": A Person other than a Non-U.S. Person.
"Voting Rights": The portion of the voting rights of all of the Securities
which is allocated to any Security. Unless otherwise provided in the Pooling and
Master Servicing Agreement, (a) if any Class of Securities does not have a
Security Principal Balance or has an initial Security Principal Balance that is
less than or equal to 1% of the aggregate Security Principal Balance of all the
Securities, then 1% of Voting Rights shall be allocated to each Class of such
Securities having no Security Principal Balance or a Security Principal Balance
equal to or less than 1% of the aggregate Security Principal Balance of all
Securities, and the balance of Voting Rights shall be allocated among the
remaining Classes of Securities in proportion to their respective Security
Principal Balances following the most recent Distribution Date, and (b) if no
Class of Securities has an initial Security Principal Balance less than 1% of
the aggregate Security Principal Balance, then all of the Voting Rights shall be
allocated among all the Classes of Securities in proportion to their respective
Security Principal Balances following the most recent Distribution Date. Voting
Rights allocated to each Class of Securities shall be allocated in proportion to
the respective Percentage Interests of the Holders thereof.
"Withholding Agent": The Trustee or its designated Paying Agent or other
person who is liable to withhold federal income tax from a distribution on a
Residual Security under Section 1441 and 1442 of the Code and the Treasury
regulations thereunder.
ARTICLE II
MORTGAGE ASSET FILES
Section 2.01. Mortgage Asset Files.
Pursuant to a Pooling and Master Servicing Agreement, the Company has sold
to the Trustee without recourse all the right, title and interest of the Company
in and to the Mortgage Assets, any and all rights, privileges and benefits
accruing to the Company under the Sales
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Agreement and the Servicing Agreement with respect to the Mortgage Assets
(except, in the case of the Sales Agreement, any rights of the Company to fees
and indemnification by the Seller under such Agreement), including the rights
and remedies with respect to the enforcement of any and all representations,
warranties and covenants under such agreements and all other agreements and
assets included or to be included in the Trust for the benefit of the
Securityholders as set forth in the conveyance clause of the Pooling and Master
Servicing Agreement. Such assignment includes all of the Company's rights to
Monthly Payments on the Mortgage Assets due after the Cut-off Date, and all
other payments of principal (and interest) made on or after the Cut-off Date
that are reflected in the initial aggregate Security Principal Balance of the
Securities for a Trust.
In connection with such transfer and assignment, the Company shall deliver,
or cause to be delivered, to the Trustee or the Custodian on or before the
Closing Date, a Trustee Mortgage Asset File with respect to each Mortgage Asset.
If any Security Instrument or an Assignment of a Security Instrument to the
Trustee or any prior Assignment is in the process of being recorded on the
Closing Date, the Company shall cause each such original recorded document or
certified copy thereof, to be delivered to the Trustee promptly following its
recordation. The Company shall also cause to be delivered to the Trustee any
other original Mortgage Asset Document to be included in the Trustee Mortgage
Asset File if a copy thereof initially was delivered.
The Seller has delivered or caused to be delivered to the Servicer, on or
before the Closing Date, a Servicer Mortgage Asset File containing each of the
documents listed in the Servicing Agreement. All such documents shall be held by
the Servicer in trust for the benefit of the Trustee on behalf of the
Securityholders.
Section 2.02. Acceptance by the Trustee.
(a) By its execution of the Pooling and Master Servicing Agreement, the
Trustee acknowledges and declares that it or the Custodian holds and will hold
or has agreed to hold all documents delivered to it from time to time with
respect to a Mortgage Asset and all assets included in the definition of "Trust
Estate" in the related Pooling and Master Servicing Agreement in trust for the
exclusive use and benefit of all present and future Securityholders. The Trustee
represents and warrants that to the best of its knowledge, (i) it acquired the
Mortgage Assets on behalf of the Trust from the Company in good faith, for
value, and without actual notice or actual knowledge of any adverse claim, lien,
charge, encumbrance or security interest (including, without limitation, federal
tax liens or liens arising under ERISA) (it being understood that the Trustee
has not undertaken searches (lien records or otherwise) of any public records),
(ii) except as permitted in the Pooling and Master Servicing Agreement, it has
not and will not, in any capacity, assert any claim or interest in the Mortgage
Assets and will hold (or its agent will hold) such Mortgage Assets and the
proceeds thereof in trust pursuant to the terms of the Agreement, and (iii) it
has not encumbered or transferred its right, title or interest in the Mortgage
Assets.
(b) The Trustee (or Custodian) shall, on the Closing Date, deliver to the
Company and the Master Servicer an Initial Certification certifying that, except
as specifically noted on a schedule of exceptions attached thereto and subject
to its review as herein provided, it is in
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possession of a Trustee Mortgage Asset File for each Mortgage Asset. Before
making this Initial Certification, the Trustee (or Custodian) shall have
examined each Note to confirm that:
(i) except for the endorsement required pursuant to clause (a) of
the definition of Trustee Mortgage Asset File, the Note, on the face or the
reverse side(s) thereof, does not contain evidence of any unsatisfied
claims, liens, security interests, encumbrances or restrictions on
transfer; and
(ii) the Note bears an endorsement (which appears to be an original)
as required pursuant to clause (a) of the definition of Trustee Mortgage
Asset File.
(c) The Trustee (or Custodian) agrees, for the benefit of the
Securityholders, to review each Trustee Mortgage Asset File within 45 days of
the Closing Date to ascertain that all documents required to be included in the
Trustee Mortgage Asset File are included therein, and to deliver to the Company
and the Master Servicer an Interim Certification with respect to each Mortgage
Asset (except any Mortgage Asset that has been liquidated or purchased from the
Trust) to the effect that, except as specifically noted on a schedule of
exceptions thereto, (i) all documents required to be contained in the Trustee
Mortgage Asset File are in its possession, (ii) such documents have been
reviewed by it and appear regular on their face and relate to such Mortgage
Asset and (iii) based on its examination and only as to the foregoing documents,
the Mortgage Asset Schedule accurately reflects information set forth in the
Trustee Mortgage Asset File.
It is understood that before making the Interim Certification, the Trustee
(or Custodian) shall examine the Mortgage Asset Documents to confirm that:
(A) each Note and Security Instrument bears a signature or
signatures that appear to be original and that purport to be that of the
Person or Persons named as the maker and mortgagor/trustor or, if
photocopies are permitted, that such copies bear a reproduction of such
signature or signatures;
(B) except for the endorsement required pursuant to clause (a) of
the definition of Trustee Mortgage Asset File, neither the Security
Instrument nor any Assignment, on the face or the reverse side(s) thereof,
contains evidence of any unsatisfied claims, liens, security interests,
encumbrances or restrictions on transfer;
(C) the principal amount of the indebtedness secured by the Security
Instrument is identical to the original principal amount of the Note;
(D) the Assignment of the Security Instrument from the Seller to the
Trustee is in the form required pursuant to clause (c) of the definition of
Trustee Mortgage Asset File, and bears the signature of the Seller that
appears to be an original and any other necessary party or, if photocopies
are permitted, such copies bear a reproduction of such signature or
signatures;
(E) if intervening Assignments are included in the Trustee Mortgage
Asset File, each such intervening Assignment bears the signature of the
Mortgagee and/or the
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assignee (and any other necessary party) or, if photocopies are permitted,
that such copies bear a reproduction of such signature or signatures;
(F) if either a Title Insurance Policy, a Preliminary Title Report
or a written commitment to issue a Title Insurance Policy is delivered, the
address of the real property set forth in such policy, report or written
commitment is identical to the real property address contained in the
Security Instrument; and
(G) if any of a Title Insurance Policy, Certificate of Title
Insurance or a written commitment to issue a Title Insurance Policy is
delivered, such policy, certificate or written commitment is for an amount
not less than the original principal amount of the Note and such Title
Insurance Policy insures that the Security Instrument constitutes a first
lien, senior in priority to all other deeds of trust, mortgages, deeds to
secure debt, financing statements and security agreements and to any
mechanics' liens, judgment liens or writs of attachment (or if the Title
Insurance Policy or Certificate has not been issued, the written commitment
for such insurance obligates the Insurer to issue such policy for an amount
not less than the original principal amount of the Note).
(d) Prior to the first anniversary date of the Closing Date, the Trustee
(or Custodian) shall deliver to the Company and the Master Servicer a Final
Certification evidencing the completeness of the Trustee Mortgage Asset File for
each Mortgage Asset, with any applicable exceptions noted on such Certification.
(e) In giving each of the certifications required above, the Trustee shall
be under no duty or obligation (i) to inspect, review or examine any such
documents, instruments, securities or other papers to determine that they or the
signatures thereon are genuine, enforceable, or appropriate for the represented
purpose or that they have actually been recorded or that they are other than
what they purport to be on their face or that any document that appears to be an
original is, in fact, an original or (ii) to determine whether any Trustee
Mortgage Asset File should include any surety or guaranty, Note Assumption
Rider, buydown agreement, assumption agreement, modification agreement, written
assurance or substitution agreement.
(f) No later than the fifth Business Day of each third month, commencing
the fourth month following the month in which the Closing Date occurs, the
Trustee (or the Custodian on its behalf) shall deliver to the party responsible
for recordation of any Security Instruments and/or Assignments (either the
Seller or the Servicer, as specified in the related Sales Agreement or Servicing
Agreement) a Recordation Report, dated as of the first day of such month,
identifying those Mortgage Assets for which it has not yet received (i) an
original recorded Security Instrument or a copy thereof certified to be true and
correct by the public recording office in possession of such Security Instrument
or (ii) an original recorded Assignment of the Security Instrument to the
Trustee and any required intervening Assignments or a copy thereof certified to
be a true and correct copy by the public recording office in possession of such
Assignment.
(g) In lieu of taking possession of the Trustee Mortgage Asset Files and
reviewing such files itself, the Trustee may, in accordance with Section 8.11
hereof, appoint one or more Custodians to hold the Trustee Mortgage Asset Files
on its behalf and to review them as
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provided in this Section 2.02. The Company shall, upon notice of the appointment
of a Custodian, deliver or cause to be delivered all documents to the Custodian
that would otherwise be deliverable to the Trustee. In such event, the Trustee
shall obtain from each such Custodian, within the specified times, the Initial,
Interim and Final Certifications and the Recordation Reports with respect to
those Mortgage Assets held and reviewed by such Custodian and may deliver such
Certifications and Reports to the Company and the Master Servicer in
satisfaction of the Trustee's obligation to prepare such Certifications and
Reports. The Trustee shall notify the Custodian of any notices delivered to the
Trustee with respect to those Trustee Mortgage Asset Files.
Section 2.03. Purchase or Substitution of Mortgage Assets by the Seller, the
Servicer or the Company.
(a) Seller Breach. Upon discovery or notice of any defective document in a
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Trustee Mortgage Asset File, or of any breach by a Seller of any representation,
warranty or covenant under the Sales Agreement which defect or breach materially
and adversely affects the value of any Mortgage Asset or the interest of the
Trust therein (it being understood that any such defect or breach shall be
deemed to have materially and adversely affected the value of the related
Mortgage Asset or the interest of the Trust therein if the Trust incurs a loss
as a result of such defect or breach), the Trustee shall promptly notify the
Master Servicer of such defect or breach and direct the Master Servicer to
request that the Seller of such Mortgage Asset cure such defect or breach, and
if such Seller does not cure such defect or breach in all material respects
within 90 days from the date on which it is notified of the defect or breach, to
enforce such Seller's obligation under the Sales Agreement to purchase such
Mortgage Asset from the Trustee. In lieu of purchasing any such Mortgage Asset
as provided above, if so provided in the Sales Agreement, the Seller may cause
such Mortgage Asset to be removed from the Trust (in which case it shall become
a Deleted Mortgage Asset) and substitute one or more Qualified Substitute
Mortgage Assets in the manner and subject to the limitations set forth in
Section 2.03(h). Notwithstanding the foregoing, however, if such breach or
defect results in or is a Qualification Defect, such cure, purchase or
substitution must take place within 75 days of the Defect Discovery Date. It is
understood and agreed that enforcement of the obligation of the Seller to cure,
purchase or substitute for any Mortgage Asset as to which a material defect in a
constituent document exists or as to which such a breach has occurred and is
continuing shall constitute the sole remedy respecting such defect or breach
available to the Trustee on behalf of the Securityholders.
(b) Servicer Breach. In addition to taking any action required pursuant to
---------------
Section 7.01 hereof, upon discovery or notice of any breach by a Servicer of any
representation, warranty or covenant under the Servicing Agreement which
materially and adversely affects the value of any Mortgage Asset or the interest
of the Trust therein (it being understood that any such defect or breach shall
be deemed to have materially and adversely affected the value of the related
Mortgage Asset or the interest of the Trust therein if the Trust incurs a loss
as a result of such defect or breach), the Trustee promptly shall notify the
Master Servicer of such breach and direct the Master Servicer to request that
the Servicer cure such breach and, if the Servicer does not cure such breach in
all material respects within 90 days from the date on which it is notified of
the breach, to enforce the Servicer's obligation under the Servicing Agreement
to purchase such Mortgage Asset from the Trustee. Notwithstanding the foregoing,
however, if such breach is a
22
Qualification Defect, such cure or purchase must take place within 75 days of
the Defect Discovery Date.
In the event the Seller has breached a representation or warranty under the
Sales Agreement that is substantially identical to a representation or warranty
breached by the Servicer, the Master Servicer shall first proceed against the
Seller. If the Seller does not within 90 days after notification of the breach,
take steps to cure such breach or purchase or substitute for the Mortgage Asset,
the Master Servicer shall enforce the obligations of the Servicer under the
Servicing Agreement to cure such breach or purchase the Mortgage Asset from the
Trust as provided in this Section 2.03(b).
Except as specifically set forth herein, the Trustee shall have no
responsibility to enforce any provision of the Sales Agreements and Servicing
Agreements assigned to it hereunder, to oversee compliance thereof, or to take
notice of any breach or default thereof. No successor servicer shall have any
obligation to repurchase a Mortgage Asset except to the extent specifically set
forth in the Servicing Agreement signed by such substitute servicer.
(c) Company Breach. Within 90 days of the earlier of discovery or receipt
--------------
of notice by the Company of the breach of any of its representations or
warranties set forth in Section 2.04 hereof with respect to any Mortgage Asset,
which breach materially and adversely affects the value of the related Mortgage
Asset or the interest of the Trust therein (it being understood that any such
defect or breach shall be deemed to have materially and adversely affected the
value of the related Mortgage Asset or the interest of the Trust therein if the
Trust incurs a loss as a result of such defect or breach), the Company shall (i)
cure such breach in all material respects, (ii) purchase the Mortgage Asset from
the Trustee, or (iii) remove such Mortgage Asset from the Trust (in which case
it shall become a Deleted Mortgage Asset) and substitute one or more Qualified
Substitute Mortgage Assets in the manner and subject to the limitations set
forth in Section 2.03(h) hereof. Notwithstanding the foregoing, however, if such
breach is a Qualification Defect, such cure, purchase or substitution must take
place within 75 days of the Defect Discovery Date.
(d) Assignment Failure. If an Assignment to the Trustee of the Seller's
------------------
interest in a Security Instrument has not been recorded within one year of the
Closing Date of the related Securities, the Master Servicer shall enforce the
Servicer's obligation set forth in the Servicing Agreement or the Seller's
obligation under the Sales Agreement either to (i) purchase the related Mortgage
Asset from the Trustee on behalf of the Securityholders or (ii) if there have
been no defaults in the Monthly Payments on such Mortgage Asset, deposit an
amount equal to the Purchase Price into an escrow account maintained by the
Trustee (which account shall not be an asset of the Trust or any REMIC), as
required by the applicable Servicing Agreement or Sales Agreement. Any such
amounts deposited to an escrow account, plus any earnings thereon, shall (A) be
released to the Servicer or Seller, as the case may be, upon receipt by the
Trustee of satisfactory evidence that the Assignment has been recorded in the
name of the Trustee or (B) be applied to purchase the related Mortgage Asset in
the event that the Master Servicer notifies the Trustee that there has been a
default thereon. Any amounts in the escrow account may be invested in Permitted
Investments at the written direction of the Master Servicer.
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(e) Converted Mortgage Loans. Upon receipt of written notice from the
------------------------
Master Servicer of the conversion of any ARM Loan to a Converted Mortgage Loan,
the Trustee shall direct the Master Servicer to enforce the Servicer's
obligation, if any, set forth in the Servicing Agreement or the Seller's
obligation, if any, set forth in the Sales Agreement to purchase such Converted
Mortgage Loan from the Trustee. In the event the Servicer or Seller defaults
upon its obligation to purchase any Converted Mortgage Loan, and such default
remains unremedied for a period of five Business Days after written notice of
such default shall have been given by the Master Servicer to the Servicer or
Seller, as applicable, then the Master Servicer shall use its best efforts to
cause such Converted Mortgage Loan to be sold for settlement on the last day of
any month to any entity which the Master Servicer may in its sole discretion
select. The Master Servicer shall not cause a Converted Mortgage Loan to be
sold or otherwise transferred to a Person other than the Servicer or Seller (or
other Person who has a pre-existing obligation to purchase such Mortgage Asset)
unless (i) upon such sale the Trust would receive a net amount at least equal to
the Purchase Price and (ii) if the Purchase Price exceeds the Basis Limit
Amount, the Master Servicer receives an Opinion of Counsel (which Opinion of
Counsel shall not be an expense of the Master Servicer) that such disposition of
a Converted Mortgage Loan will not result in the imposition of a "prohibited
transaction" tax (as such term is defined in the Code) on the related REMIC or
jeopardize its status as a REMIC. Any such Converted Mortgage Loan which is not
purchased by the Servicer or the Seller and which the Master Servicer is unable
to sell shall remain in the Trust.
(f) Purchase of Delinquent Mortgage Assets. The Seller may, but is not
--------------------------------------
obligated to, purchase any Mortgage Asset that is delinquent in payment by 90
days or more for a price equal to the greater of the Purchase Price for such
Mortgage Asset or the fair market value thereof at the time of purchase.
(g) Purchase Price. Except as otherwise provided in the Pooling and Master
--------------
Servicing Agreement, the purchase of any Mortgage Asset from the Trust pursuant
to this Section 2.03 shall be effected for its Purchase Price. If the Purchaser
is the Servicer, the Purchase Price shall be deposited in the Custodial P&I
Account. If the Purchaser is other than the Servicer, an amount equal to the
Purchase Price shall be deposited into the Master Servicer Custodial Account.
Within five Business Days of its receipt of such funds or certification by the
Master Servicer that such funds have been deposited in the Custodial P&I Account
or Master Servicer Custodial Account, the Trustee shall release or cause to be
released to the Purchaser the related Trustee Mortgage Asset File and Servicer
Mortgage Asset File and shall execute and deliver such instruments of transfer
or assignment, in each case without recourse, in form as presented by the
Purchaser and satisfactory to the Trustee, as shall be necessary to vest in the
Purchaser title to any Mortgage Asset released pursuant hereto and the Trustee
shall have no further responsibility with regard to such Trustee Mortgage Asset
File or Servicer Mortgage Asset File. The Master Servicer shall cause the
Servicer of any Deleted Mortgage Asset to release to the Purchaser the Servicer
Mortgage Asset File relating thereto.
(h) Substitution. Unless otherwise provided in the Pooling and Master
------------
Servicing Agreement, the right to substitute a Qualified Substitute Mortgage
Asset for any Deleted Mortgage Asset that is an asset of the Trust shall be
limited to (i) in the case of substitutions pursuant to Section 2.03(a) or
2.03(c), the two-year period beginning on the Closing Date and (ii) in the case
of any other substitution, the three-month period beginning on the Closing Date.
24
As to any Deleted Mortgage Asset for which the Company or a Seller
substitutes a Qualified Substitute Mortgage Asset(s), the Company or the Seller,
as the case may be, shall effect such substitution by delivering to the Trustee
for such Qualified Substitute Mortgage Asset(s) the Note, the Security
Instrument, the related Assignment(s), and such other documents and agreements,
with all necessary endorsements thereon, as are required to be included in the
Trustee Mortgage Asset File pursuant to Section 2.01, together with a
certificate of an officer of the Company to the effect that each such Qualified
Substitute Mortgage Asset complies with the terms of the Pooling and Master
Servicing Agreement. Monthly Payments due with respect to Qualified Substitute
Mortgage Assets in the month of substitution are not part of the Trust and will
be retained by the Company or the Seller, as the case may be. For the month of
substitution, distributions to Securityholders will reflect the Monthly Payment
due on such Deleted Mortgage Asset on or before the first day of the month in
which the substitution occurs, and the Company or the Seller, as the case may
be, shall thereafter be entitled to retain all amounts subsequently received in
respect of such Deleted Mortgage Asset. The Master Servicer shall amend the
Mortgage Asset Schedule to reflect the removal of such Deleted Mortgage Asset
from the terms of the Pooling and Master Servicing Agreement and the
substitution of the Qualified Substitute Mortgage Asset or Assets. Upon such
substitution, such Qualified Substitute Mortgage Asset or Assets shall be
subject to the terms of the Pooling and Master Servicing Agreement in all
respects, including, in the case of a substitution effected by a Seller, the
representations and warranties included in the Sales Agreement, and in the case
of a substitution effected by the Company, the representations and warranties
set forth in Section 2.04 hereof, in each case as of the date of substitution.
The Trustee shall, within five Business Days of its receipt of the documents
referred to above, effect the reconveyance of such Deleted Mortgage Asset to the
Company or the Seller, as the case may be, in accordance with the procedures
specified above.
For any month in which the Company or a Seller substitutes one or more
Qualified Substitute Mortgage Assets for one or more Deleted Mortgage Assets,
the Master Servicer will determine and notify the Trustee with respect to the
amount (if any) by which the aggregate Unpaid Principal Balance of all such
Qualified Substitute Mortgage Assets as of the date of substitution is less than
the aggregate Unpaid Principal Balance of all such Deleted Mortgage Assets
(after application of Monthly Payments due in the month of substitution) (the
"Substitution Shortfall"). On the date of such substitution, the Company or the
Seller, as the case may be, will deliver or cause to be delivered to the Trustee
for deposit from its own funds into the Asset Proceeds Account an amount equal
to the Substitution Shortfall.
(i) Determination of Purchase Price. The Master Servicer will be
-------------------------------
responsible for determining the Purchase Price for any Mortgage Asset and, where
appropriate, the Basis Limit Amount for any Converted Mortgage Asset that is
sold by the Trust or with respect to which provision is made for the escrow of
funds pursuant to this Section 2.03 and shall at the time of any purchase or
escrow certify such amounts to the Trustee. If, for whatever reason, the Master
Servicer shall certify to the Trustee that there is a miscalculation of the
amount to be paid to the Trust, the Trustee shall from monies in the Asset
Proceeds Account return any overpayment that the Trust received as a result of
such miscalculation to the applicable Purchaser upon the discovery of such
overpayment, and the Master Servicer shall collect from the applicable Purchaser
for payment to the Trustee any underpayment that resulted from such
miscalculation upon the discovery of such underpayment. Recovery may be made
either directly or by set-off of all or any part of such underpayment against
amounts owed by the Trust to such Purchaser.
25
(j) Qualification Defect. If (A) any person required to cure, purchase,
or substitute under subsections 2.03(a), 2.03(b) or 2.03(c) of these Standard
Terms or under a separate agreement for a Mortgage Asset affected by a
Qualification Defect fails to perform within the earlier of (1) 75 days of the
Defect Discovery Date or (2) the time limit set forth in those subsections or
that separate agreement or (B) no person is obligated to cure, purchase or
substitute for a Mortgage Asset affected by a Qualification Defect, the Trustee
shall dispose of such Mortgage Asset in such manner and for such price as the
Master Servicer notifies the Trustee are appropriate, provided that the removal
of such Mortgage Asset occurs no later than the 90th day from the Defect
Discovery Date. It is the express intent of the parties that a Mortgage Asset
affected by a Qualification Defect be removed from the Trust before the 90th day
from the Defect Discovery Date so that the related REMIC(s) will continue to
qualify as a REMIC(s). Accordingly, the Trustee is not required to sell an
affected Mortgage Asset for its fair market value nor shall the Trustee be
required to make up any shortfall resulting from the sale of such Mortgage
Asset. The person failing to perform under subsections 2.03(a), 2.03(b) or
2.03(c) of these Standard Terms shall be liable to the Trust for (i) any
difference between (A) the Unpaid Principal Balance of the Mortgage Asset plus
accrued and unpaid interest thereon at the Note Rate to the date of disposition
and (B) the net amount received by the Trustee from the disposition (after the
payment of related expenses), (ii) interest on such difference at the Note Rate
from the date of disposition to the date of payment and (iii) any legal and
other expenses incurred by or on behalf of the Trust in seeking such payments.
Except where the Master Servicer is the person failing to perform, the Master
Servicer shall pursue the legal remedies of the Trust on the Trust's behalf and
the Trust shall reimburse the Master Servicer for any legal or other expenses of
the Master Servicer related to such pursuit not recovered from such person. If
the Master Servicer is the person failing to perform, the Trustee shall pursue
the Trust's legal remedies against the Master Servicer and the Trust shall
reimburse the Trustee for its related legal or other expenses.
Any person required under this Section 2.03 to give notice or to make a
request of another person to give notice shall give such notice or make such
request promptly.
Section 2.04. Representations and Warranties of the Company.
The Company hereby represents and warrants to the Trustee that as of the
Closing Date or as of such other date specifically provided herein:
(a) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Tennessee with full
power and authority (corporate and other) to own its properties and conduct its
business as now conducted by it and to enter into and perform its obligations
under the Pooling and Master Servicing Agreement, and has duly qualified to do
business as a foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns or leases
material properties, except where the failure to so qualify would not have a
material adverse effect on the Company;
(b) The Pooling and Master Servicing Agreement, assuming due
authorization, execution and delivery by the Trustee and the Master Servicer,
constitutes a legal, valid and binding agreement of the Company, enforceable
against it in accordance with its terms, subject
26
to bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and to general principles of equity
regardless of whether enforcement is sought in a proceeding in equity or at law;
(c) Neither the execution and delivery by the Company of the Pooling and
Master Servicing Agreement, nor the consummation by the Company of the
transactions therein contemplated, nor compliance by the Company with the
provisions thereof, will (i) conflict with or result in a breach of, or
constitute a default under, any of the provisions of the articles of
incorporation or by-laws of the Company or any law, governmental rule or
regulation or any judgment, decree or order binding on the Company or any of its
properties, or any of the provisions of any indenture, mortgage, deed of trust,
contract or other instrument to which the Company is a party or by which it is
bound, or (ii) result in the creation of any lien, charge, or encumbrance upon
any of its properties pursuant to the terms of any such indenture, mortgage,
deed of trust, contract or other instrument;
(d) There are no actions, suits or proceedings against, or investigations
of, the Company pending, or, to the knowledge of the Company, threatened, before
any court, administrative agency or other tribunal (i) asserting the invalidity
of the Pooling and Master Servicing Agreement or (ii) seeking to prevent the
issuance of the Securities or the consummation of any of the transactions
contemplated by the Pooling and Master Servicing Agreement;
(e) The information set forth in the Mortgage Asset Schedule with respect
to each Mortgage Asset is true and correct in all material respects at the date
or dates respecting which such information is furnished;
(f) The Company is the owner of, or holder of a perfected first priority
security interest in, each Mortgage Asset;
(g) The Company has acquired its ownership of, or security interest in,
each such Mortgage Asset in good faith without notice of any adverse claim;
(h) Except for the sale to the Trustee, the Company has not assigned any
interest or participation in each such Mortgage Asset (or, if any such interest
or participation has been assigned, it has been released); and
(i) The Company has full right to sell the Trust Estate to the Trustee.
It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive delivery of the respective Trustee
Mortgage Asset Files to the Trustee and shall inure to the benefit of the
Trustee notwithstanding any restrictive or qualified endorsement or assignment.
Upon the discovery by the Company, the Master Servicer or the Trustee of a
breach of the foregoing representations and warranties, the party discovering
such breach shall give prompt written notice to the other parties to the Pooling
and Master Servicing Agreement, and in no event later than two Business Days
from the date of such discovery. It is understood and agreed that the
obligations of the Company set forth in Section 2.03(c) to cure, substitute for
or repurchase a Mortgage Asset constitute the sole remedies available to the
Securityholders or to the Trustee on their behalf respecting a breach of the
representations and warranties contained
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in this Section 2.04. It is further understood and agreed that the Company shall
be deemed not to have made the representations and warranties in this Section
2.04 with respect to, and to the extent of, representations and warranties made,
as to the matters covered in this Section 2.04, by any Servicer in the related
Servicing Agreement assigned to the Trustee or any Seller in the related Sales
Agreement assigned to the Trustee.
Section 2.05. Representations, Warranties and Covenants of the Master Servicer.
The Master Servicer hereby represents, warrants and covenants to the
Trustee that as of the Closing Date or as of such date specifically provided
herein:
(a) The Master Servicer has been duly organized and is validly existing as
a [national banking association] and in good standing under the laws of the
United States of America with full power and authority (corporate and other) to
own its properties and conduct its business as now conducted by it and to enter
into and perform its obligations under the Pooling and Master Servicing
Agreement, and has duly qualified to do business and is in good standing under
the laws of each jurisdiction wherein it owns or leases any material properties
or conducts any material business or in which the performance of its duties
under the Pooling and Master Servicing Agreement would require such
qualification, except where the failure so to qualify would not have a material
adverse effect on the performance of its obligations under the Pooling and
Master Servicing Agreement;
(b) The Pooling and Master Servicing Agreement, assuming due
authorization, execution and delivery by the Company and the Trustee,
constitutes a legal, valid and binding agreement of the Master Servicer,
enforceable against it in accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, (ii) general principles of equity regardless of
whether enforcement is sought in a proceeding in equity or at law and (iii) any
notice, order, directive, or similar action by a federal banking agency that
would be enforceable pursuant to Section 8 of the Federal Deposit Insurance Act
to the extent that such notice, order, directive, or action prohibits or enjoins
performance by the Master Servicer;
(c) Neither the execution and delivery by the Master Servicer of the
Pooling and Master Servicing Agreement, nor the consummation by the Master
Servicer of the transactions therein contemplated, nor compliance by the Master
Servicer with the provisions thereof, will (i) conflict with or result in a
breach of, or constitute a default under, any of the provisions of the articles
of association or by-laws of the Master Servicer or any law, governmental rule
or regulation, or any judgment, decree or order binding on the Master Servicer
or its properties, or any of the provisions of any indenture, mortgage, deed of
trust, contract or other instrument to which the Master Servicer is a party or
by which it is bound or (ii) result in the creation or imposition of any lien,
charge or encumbrance upon any of its properties pursuant to the terms of any
such indenture, mortgage, deed of trust, contract or other instrument.
(d) No litigation is pending or, to the best of the Master Servicer's
knowledge, threatened against the Master Servicer which would prohibit its
entering into the Pooling and Master Servicing Agreement or performing its
obligations under the Pooling and Master Servicing Agreement; and
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(e) The Master Servicer maintains a Master Servicer Errors and Omissions
Policy and Fidelity Bond which covers the Master Servicer's performance under
the Pooling and Master Servicing Agreement and such policy and bond are in full
force and effect.
Upon discovery by any of the Company, the Master Servicer or the Trustee of
a breach of any of the foregoing representations, warranties and covenants which
materially and adversely affects the interest of the Securityholders in any
Mortgage Asset, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the other parties.
ARTICLE III
ADMINISTRATION OF THE TRUST
Section 3.01. Master Servicer Custodial Account.
(a) Establishment. The Master Servicer shall establish a Master Servicer
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Custodial Account into which the Master Servicer shall deposit payments,
collections and Advances with respect to the Mortgage Assets until such amounts
are transferred to the Asset Proceeds Account as provided herein. The Master
Servicer may elect to use a single Master Servicer Custodial Account for more
than one series of Securities, but shall maintain separate accounting records
for each Series of Securities. Each Master Servicer Custodial Account shall be
an Eligible Account and shall reflect the custodial nature of the account and
that all funds in such account (except interest earned thereon) are held in
trust for the benefit of the Trustee. The Master Servicer Custodial Account
shall not be considered an asset of the Trust or any REMIC. The Master Servicer
will notify the Trustee of the location and account number of such Master
Servicer Custodial Account and of any changes in the location or account number
of such account.
(b) Deposits. On each Remittance Date, the Master Servicer shall withdraw
--------
from the Custodial P&I Account maintained by a Servicer and deposit into the
Master Servicer Custodial Account an amount with respect to each Mortgage Asset
serviced by such Servicer equal to:
(i) Monthly Payments received by the Servicer during the preceding
Due Period, whether paid by the Borrower or advanced by the Servicer minus
the Servicing Fee due the Servicer to the extent paid by the Borrower;
(ii) all Monthly Payments made by a Borrower after their Due Date
and which were not paid or advanced pursuant to Subsection 3.01(b)(i);
(iii) all other payments (other than late charges, conversion fees
and similar charges and fees retained by a Servicer pursuant to the
Servicing Agreement) received in connection with any unscheduled principal
payments or recoveries on the Mortgage Assets during the previous
Prepayment Period, including Liquidation Proceeds and Insurance Proceeds,
together with any interest thereon paid by or for the account of the
Borrower minus the sum of (A) expenses associated with such recovery, (B)
any Advances on such Mortgage Assets paid by the Servicer and (C) the
Servicing Fee allocable thereto; and
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(iv) the Purchase Price of any Mortgage Asset purchased by the
Servicer.
(c) Withdrawals. On a daily basis, the Master Servicer may withdraw from
-----------
the appropriate Master Servicer Custodial Account (to the extent the funds
therein are not invested) any Non-Recoverable Advance and any Advance previously
made with respect to a Mortgage Asset as to which a late payment, Insurance
Proceeds or Liquidation Proceeds have been received.
On or prior to the Master Servicer Remittance Date, the Master Servicer
shall remit from the funds in each Master Servicer Custodial Account by wire
transfer (or as otherwise instructed by the Trustee) in immediately available
funds to the Asset Proceeds Account an amount equal to the aggregate of the
following:
(i) Monthly Payments received by the Master Servicer during the
preceding Due Period, whether or not paid by the Borrower, or advanced by a
Servicer, the Master Servicer, the Trustee or an Insurer, minus the sum of
(A) Servicing Fees due the Servicer to the extent paid by the Borrower and
(B) the Master Servicing Fee (net of any payments on account of Month End
Interest required pursuant to Section 3.05) to the extent paid by the
Borrower or advanced by the Servicer;
(ii) all Monthly Payments made by a Borrower after their Due Date
and which were not paid or advanced pursuant to Subsection 3.01(c)(i), net
of the Master Servicing Fee after payment of Month End Interest required
pursuant to Section 3.05;
(iii) all other payments received by the Master Servicer in
connection with any unscheduled principal payments or recoveries on the
Mortgage Assets during the preceding Prepayment Period, including
Liquidation Proceeds and Insurance Proceeds, together, with respect to
prepayments or Liquidation Proceeds or Insurance Proceeds received during
the preceding calendar month, any interest thereon received by the Master
Servicer (less the Master Servicing Fee attributable thereto after payment
of Month End Interest required pursuant to Section 3.05); and
(iv) The Purchase Price of any Mortgage Assets purchased from the
Trust during the preceding Prepayment Period, less any amounts due the
Servicer or Master Servicer on account of Advances, the Servicing Fee or
the Master Servicing Fee attributable to such Mortgage Asset.
(d) Investment. The Master Servicer shall cause the funds in the Master
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Servicer Custodial Account to be invested in Permitted Investments with a
maturity prior to the next Master Servicer Remittance Date. Net investment
income on the funds in the Master Servicer Custodial Account on such investments
shall be released to the Master Servicer as a part of its Master Servicer
Compensation no later than the fifth Business Day of the month following the
month in which the related Distribution Date occurs, unless provided in the
Pooling and Master Servicing Agreement that such net investment income be
applied to the payment of Month End Interest Shortfall or other amounts due from
the Master Servicer. If there is a loss on the investments in the Master
Servicer Custodial Account for any month, the Master Servicer shall pay the
amount of such loss no later than the fifth Business Day of the following month.
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Section 3.02. Asset Proceeds Account.
(a) Deposits. The Trustee shall establish and maintain one or more
--------
accounts (collectively, the "Asset Proceeds Account") held in trust for the
benefit of the Securityholders. Each Asset Proceeds Account shall be an
Eligible Account. On each Distribution Date, the Trustee shall deposit into the
Asset Proceeds Account the following amounts, to the extent not previously
deposited therein:
(i) the amount to be deposited from the Master Servicer Custodial
Account pursuant to Section 3.01(c);
(ii) Advances;
(iii) the amount required to effect a Terminating Purchase pursuant
to Section 9.02; and
(iv) the amount required to be deposited from any Insurance Policy
or Reserve Fund, as provided in the Pooling and Master Servicing Agreement.
(b) Withdrawal. On each Distribution Date, the Trustee shall withdraw all
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monies in the Asset Proceeds Account in accordance with the amounts set forth in
the statement furnished by the Master Servicer pursuant to Section 4.01 in the
following order of priority for the purposes indicated:
(i) to pay each Servicer its monthly Servicing Fee, to the extent
not retained by such Servicer;
(ii) to reimburse the Trustee, the Master Servicer or the Servicer,
in that order of priority, for any Advance previously made that has been
determined to be a Non-Recoverable Advance;
(iii) to reimburse the Company or the Master Servicer for expenses
incurred by or reimbursable to it pursuant to Section 6.03;
(iv) to refund any overpayment of the Purchase Price of a Mortgage
Asset;
(v) to pay the Master Servicer its Master Servicing Fee, to the
extent not previously paid;
(vi) to pay the Securityholders (or, in the case of a Double REMIC
Series, to pay the holders of the Regular Interests and Residual Interest
of the Pooling REMIC), the amount of the Available Distribution as provided
in the Pooling and Master Servicing Agreement; and
(vii) to reimburse the Master Servicer or Trustee for Advances not
previously reimbursed.
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(c) Accounting. The Master Servicer shall keep and maintain separate
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accounting, on a Mortgage Asset by Mortgage Asset basis, for the purpose of
justifying any payment to and from the Asset Proceeds Account.
(d) Investment. The Master Servicer shall direct the Trustee in writing
----------
(which may be in the form of standing instructions) as to the investment of
funds (which shall be invested in Permitted Investments) in the Asset Proceeds
Account for the period from the Master Servicer Remittance Date through the
Distribution Date. Net investment income on funds in the Asset Proceeds Account
shall be released to the Master Servicer as part of its Master Servicer
Compensation no later than the fifth Business Day of the month following the
month in which the related Distribution Date occurs, unless provided in the
Pooling and Master Servicing Agreement that such net investment income be
applied to the payment of Month End Interest Shortfall or other amounts due from
the Master Servicer.
Section 3.03. Issuing REMIC Accounts.
(a) With respect to any Double REMIC Series, the Trustee shall establish
one or more accounts into which the Trustee shall deposit all payments on
account of the Regular Interests in the Pooling REMIC that are considered assets
of the Issuing REMIC and from which the Trustee shall withdraw funds to pay the
Securities evidencing an interest in the Issuing REMIC.
(b) With respect to any Double REMIC Series, the Trustee shall establish
one or more accounts into which the Trustee shall deposit all payments on
account of the Residual Interests in the Pooling REMIC and any Regular Interests
in the Pooling REMIC that are not considered assets of the Issuing REMIC and
from which the Trustee shall withdraw funds to pay the Securities that do not
evidence an interest in the Issuing REMIC. In lieu of establishing such an
account, the Trustee may pay on each Distribution Date to the Holders of the
Securities that do not evidence interests in the Issuing REMIC the amounts that
are due with respect to such Securities. In addition, upon payment in full of
the Regular Interests and all administrative costs of the Trust and the REMICs,
any amount remaining in the Asset Proceeds Account may be distributed directly
to the Holders of the Security representing beneficial ownership of the Residual
Interest in the Pooling REMIC.
Section 3.04. Advances by Master Servicer and Trustee.
(a) To the extent not made by the Servicer of a Mortgage Asset, the Master
Servicer shall be obligated to make Advances with respect to such Mortgage Asset
to the extent that the Master Servicer determines, in good faith, that an
Advance made hereunder is recoverable from Insurance Proceeds, Liquidation
Proceeds or subsequent payments by the Borrower of such Mortgage Asset. In the
event the Master Servicer determines that all, or a portion, of any Advance
required by this Section 3.04 is not so recoverable, the Master Servicer shall
promptly deliver to the Trustee an Officer's certificate setting forth the
reasons for such determination and the amount of the Non-Recoverable Advance (a
"Non-Recoverability Certificate"). Subject to the foregoing:
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(i) Prior to the close of business on the Business Day prior to the
Master Servicer Remittance Date, the Master Servicer shall determine
whether and to what extent any Servicers have failed to make any Advances
in respect of Monthly Payments that were due on the previous Due Date. The
Master Servicer shall make an Advance to the Master Servicer Custodial
Account in the amount, if any, of the aggregate Monthly Payments (less
applicable Servicing Fees) on the Mortgage Assets that were due on the Due
Date but which were not received or advanced by the Servicers and remitted
to the Master Servicer Custodial Account on or prior to the Master Servicer
Remittance Date. Each such Advance shall be remitted in immediately
available funds to the Master Servicer Custodial Account no later than the
Master Servicer Remittance Date for the month in which the Distribution
Date occurs.
(ii) To the extent not made by a Servicer, the Master Servicer shall
make Advances from time to time for attorneys' fees and court costs
incurred, or which reasonably can be expected to be incurred, for the
foreclosure of any Mortgage Asset or for any transaction in which the
Trustee is expected to receive a deed-in-lieu of foreclosure.
(iii) In the event that any Mortgaged Premises shall be damaged or
destroyed, and if the Servicer fails to Advance the funds necessary to
repair or restore the damaged or destroyed Mortgaged Premises, then the
Master Servicer shall Advance such funds and take such other action as is
necessary to repair or restore the damage or loss.
(iv) To the extent a Servicer is required to Advance funds
sufficient to pay the taxes or insurance premiums with respect to a
Mortgage Asset pursuant to applicable Servicing Agreement and the Servicer
fails to make such Advance, the Master Servicer shall Advance such funds
and take such steps as are necessary to pay such taxes or insurance
premiums.
(v) In the event that any Servicer fails to remit to the Master
Servicer Custodial Account on or before the Master Servicer Remittance
Date, the full amount of the funds in the custody or under the control of
the Servicer that the Servicer is required to remit under its Servicing
Agreement, then the Master Servicer shall Advance and remit to the Master
Servicer Custodial Account an amount equal to the required remittance no
later than the Master Servicer Remittance Date for the month in which such
funds were required to be remitted by the Servicer under the Servicing
Agreement.
(b) Any Advance made by the Master Servicer under this Section 3.04 which
the Master Servicer shall ultimately determine in its good faith judgment to be
not recoverable from Insurance Proceeds, Liquidation Proceeds or subsequent
payments by the Borrower shall be a Non-Recoverable Advance. The determination
by the Master Servicer that it has made a Non-Recoverable Advance shall be
evidenced by a Non-Recoverability Certificate of the Master Servicer promptly
delivered to the Trustee setting forth the reasons for such determination.
Following the Trustee's receipt of such Non-Recoverability Certificate, the
Master Servicer shall be entitled to reimbursement for such Non-Recoverable
Advance as provided herein.
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(c) If the Master Servicer fails to make any Advance required of it
hereunder, the Trustee shall, to the maximum extent permitted by law, make such
Advance in its stead and, in such event, the Trustee shall be entitled to
receive the Master Servicer Compensation payable with respect to the
Distribution Date related to such Master Servicer Remittance Date; provided,
however, in no event shall the Trustee, whether as Trustee, Master Servicer or
Servicer, be deemed to have assumed the obligations of any Person to purchase
any Mortgage Asset from the Trust for breach of representations or warranties or
as a Converted Mortgage Loan or otherwise nor to make any Advances or pay Month
End Interest with respect to any Mortgage Asset except to the extent
specifically provided in Sections 3.04 or 3.05. Notwithstanding the foregoing,
neither the Master Servicer nor the Trustee will be obligated to make an Advance
that it reasonably believes to be a Non-Recoverable Advance. The Trustee may
conclusively rely for any determination to be made by it hereunder upon the
determination of the Master Servicer as set forth in its Non-Recoverability
Certificate.
(d) To the extent that any Advance has been made by the Trustee, the
Trustee shall be entitled to reimbursement therefor at the times and to the same
extent as either the Servicer or the Master Servicer would have been so entitled
had such Person originally made such Advance, whether or not any provision of
the Pooling and Master Servicing Agreement specifically references the right of
the Trustee to such reimbursement. In the event that the Trustee learns it is
prevented by law from making such an Advance, the Trustee will notify the Master
Servicer in writing within 24 hours of receipt of such information.
(e) Notwithstanding anything herein to the contrary, no Advance shall be
required to be made by the Master Servicer or the Trustee to the extent that
making such Advance would result in the amount of aggregate Advances then
outstanding and unreimbursed by the Master Servicer or the Trustee to be in
excess of the amount, if any, set forth in the definition of "Master Servicer
Advance Amount" in the Pooling and Master Servicing Agreement.
Section 3.05. Month End Interest.
If so provided in the Pooling and Master Servicing Agreement, the Master
Servicer shall pay and deposit into the Master Servicer Custodial Account, on or
before each Master Servicer Remittance Date, an amount equal to Month End
Interest attributable to any Mortgage Asset liquidated or prepaid in the
preceding Prepayment Period, but only to the extent of its Master Servicing
Compensation payable with respect to the Distribution Date related to such
Master Servicer Remittance Date. Such payment will not be considered a Non-
Recoverable Advance; and in case of such payment, the Master Servicer shall not
be entitled to any recovery or reimbursement from the Trustee or the
Securityholders, but may seek and obtain recovery from the Servicer that failed
to make the payment through legal action or otherwise, to the extent provided in
the related Servicing Agreement.
Section 3.06. Trustee to Cooperate; Release of Mortgage Files.
The Trustee shall, if requested by any Servicer, execute a power of
appointment pursuant to which the Trustee shall authorize, make, constitute and
appoint designated officers of such Servicer with full power to execute in the
name of the Trustee (without recourse, representation or warranty) any deed of
reconveyance, any substitution of trustee documents or any other
34
document to release, satisfy, cancel or discharge any Security Instrument or
Mortgage Asset upon its payment in full or other Liquidation; provided, however,
that such power of appointment shall be limited to the powers limited above and
to those Servicers as to which a power of appointment is approved by the Rating
Agencies. The Servicer shall promptly forward to the Trustee for its files
copies of all documents executed pursuant to such power of appointment.
Upon the Liquidation of any Mortgage Asset, the Servicer shall remit the
proceeds thereof to the Master Servicer Custodial Account and unless a Servicer
has been given a power of appointment as provided in the preceding paragraph,
deliver to the Master Servicer a Request for Release of Documents (in the form
required pursuant to the related Servicing Agreement) requesting that the
Trustee execute such instrument of release or satisfaction as is necessary to
release the Mortgaged Premises from the lien of the Security Instrument. Upon
the Master Servicer's receipt of such Request for Release and its confirmation
that all amounts required to be remitted to the Master Servicer Custodial
Account in connection with such Liquidation have been so deposited, the Master
Servicer will deliver such Request for Release to the Trustee. The Trustee
shall, within five Business Days of its receipt of such a Request for Release,
release, or cause the Custodian to release, the related Trustee Mortgage Asset
File to the Master Servicer or Servicer, as requested by the Master Servicer.
No expenses incurred in connection with any instrument of satisfaction or deed
of reconveyance shall be chargeable to a Master Servicer Custodial Account or
the Asset Proceeds Account.
From time to time and as appropriate for the servicing or foreclosure of
any Mortgage Asset, including but not limited to, collection under any Title
Insurance Policy, Primary Mortgage Insurance Policy, Flood Insurance Policy or
Hazard Insurance Policy or to effect a partial release of any Mortgaged Premises
from the lien of the Security Instrument, the Servicer shall deliver to the
Master Servicer a Request for Release. Upon the Master Servicer's receipt of
any such Request for Release, the Master Servicer shall promptly forward such
request to the Trustee and the Trustee, within five Business Days, shall
release, or shall cause the Custodian to release, the related Trustee Mortgage
Asset File to the Master Servicer or the Servicer, as requested by the Master
Servicer. Any such Request for Release shall obligate the Master Servicer or
the Servicer, as the case may be, to return each and every document previously
requested from the Trustee Mortgage Asset File to the Trustee (or the Custodian)
by the twenty-first day following the release thereof, unless (a) the Mortgage
Asset has been liquidated and the Liquidation Proceeds relating to the Mortgage
Asset have been deposited in the Asset Proceeds Account or the Master Servicer
Custodial Account or (b) the Trustee Mortgage Asset File or such document has
been delivered to an attorney, or to a public trustee or other public official
as required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Premises either judicially or
non-judicially, and the Master Servicer has delivered to the Trustee a
certificate of the Master Servicer or the Servicer certifying as to the name and
address of the Person to which such Trustee Mortgage Asset File or such document
was delivered and the purpose or purposes of such delivery. Upon receipt of an
Officer's certificate of the Master Servicer or Servicer stating that such
Mortgage Asset was liquidated and that all amounts received or to be received in
connection with such liquidation which are required to be deposited into the
Master Servicer Custodial Account or Asset Proceeds Account have been so
deposited, or that such Mortgage Asset has become an REO, the Request
35
for Release shall be released by the Trustee (or the Custodian) to the Master
Servicer or Servicer, as appropriate.
Upon written certification of the Master Servicer or Servicer, the Trustee
(subject to Section 8.01(e) hereof) shall execute and deliver to the Master
Servicer or Servicer, as directed by the Master Servicer, court pleadings,
requests for trustee's sale or other documents necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Premises or to any legal action brought
to obtain judgment against any Borrower on the Note or Security Instrument or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Note or Security Instrument or otherwise available at law or in
equity. Each such certification shall include a request that such pleadings or
documents be executed by the Trustee and a statement as to the reason such
documents or pleadings are required and that the execution and delivery thereof
by the Trustee will not invalidate or otherwise affect the lien of the Security
Instrument, except for the termination of such a lien upon completion of the
foreclosure proceeding or trustee's sale.
Section 3.07. Reports to the Trustee; Annual Compliance Statements.
The Master Servicer shall deliver to the Trustee on or before April 30 of
each year, an Annual Compliance Statement with respect to each Pooling and
Master Servicing Agreement that the Master Servicer entered into on or before
the preceding December 31, signed by an Officer of the Master Servicer,
certifying that (a) such Officer has reviewed the activities of the Master
Servicer during the preceding calendar year or portion thereof and its
performance under each such Pooling and Master Servicing Agreement and (b) to
the best of such Officer's knowledge, based on such review, the Master Servicer
has performed and fulfilled its duties, responsibilities and obligations under
each such Pooling and Master Servicing Agreement in all material respects
throughout such year, or, if there has been a default in the fulfillment of any
such duties, responsibilities or obligations, specifying each such default known
to such Officer and the nature and status thereof, and (i) an Officer of the
Master Servicer has conducted an examination of the activities of each Servicer
during the preceding calendar year and its performance under its Servicing
Agreement with the Company, (ii) an Officer of the Master Servicer has examined
each Servicer's Fidelity Bond and Errors and Omissions Policy and each such bond
or policy is in effect and conforms to the requirements of the related Servicing
Agreement, (iii) the Master Servicer has received from each Servicer such
Servicer's annual audited financial statements and such other information as is
required by the related Servicing Agreement and (iv) to the best of such
Officer's knowledge, based on such examination, the Servicer has performed and
fulfilled its duties, responsibilities and obligations under its Servicing
Agreement in all material respects throughout such year, or, if there has been a
default in the performance or fulfillment of any such duties, responsibilities
or obligations, specifying each such default known to such Officer and the
nature and status thereof. Copies of the Annual Compliance Statement of the
Master Servicer shall be provided by the Trustee to any Securityholder upon
written request provided such statement is delivered, or caused to be delivered,
by the Master Servicer to the Trustee.
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Section 3.08. Title, Management and Disposition of Any REO.
(a) Each Servicing Agreement provides that in the event that any Mortgaged
Premises becomes an REO, the Servicer shall manage, conserve, protect and
operate each REO for the Securityholders solely for the purpose of its prompt
disposition and sale. The Servicer shall use its best efforts to dispose of any
REO for its fair market value within twenty-two months of its acquisition by the
Trust, unless the Trustee has been granted an extension of time to dispose of
such REO by the Internal Revenue Service pursuant to Section 856(e)(3) of the
Code (an "Extension"). If the Trustee has been granted an Extension, the
Servicer shall continue to attempt to sell the REO property for its fair market
value for the period ending two months prior to the time such Extension expires
(the "Extended Period"). In the event the Servicer is unable to dispose of any
REO within such twenty-two-month period or Extended Period, as the case may be,
the Master Servicer shall ensure that such REO is auctioned to the highest
bidder within one month after the end of such twenty-two-month period or
Extended Period, as the case may be. In the event of any such sale of an REO,
the Trustee shall, at the written request of the Master Servicer and upon being
supported with appropriate forms therefor, within five Business Days of its
receipt of the proceeds of such sale or auction, release or cause to be released
to the purchaser the related Trustee Mortgage Asset File and Servicer Mortgage
Asset File and shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as shall be necessary to vest in the
auction purchaser title to the REO and the Trustee shall have no further
responsibility with regard to such Trustee Mortgage Asset File or Servicer
Mortgage Asset File. Neither the Trustee, the Master Servicer nor the Servicer,
acting on behalf of the Trust, shall provide financing from the Trust to any
purchaser of REO Property.
(b) In the event that title to any REO is acquired, the deed or
certificate of sale shall be issued to the Trustee for the benefit of the
Holders. The Servicer shall, in accordance with Section 3.08(a), use its
reasonable efforts to sell any REO as expeditiously as possible, but in all
events within the time period, and subject to the conditions set forth in
Section 3.08(a) hereof. Pursuant to its efforts to sell such REO, the Servicer
shall either itself or through an agent selected by the Servicer protect and
conserve such REO in the same manner and to such extent as it customarily does
in connection with its own real estate acquired through foreclosure or by deed-
in-lieu of foreclosure, incident to its conservation and protection of the
interests of the Holders, and may rent the same, or any part thereof, as the
Servicer deems likely to increase the net proceeds distributable to the Holders
subject to the terms and conditions described in this Section 3.08.
For the purpose of protecting the interests of the Trustee and conserving
the REO prior to sale, the Servicer may contract with any Independent Contractor
for the conservation, protection and rental of any REO, provided that:
(i) the terms and conditions of any such contract may not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered to
require, that, the Independent Contractor (A) pay all costs and expenses
incurred in connection with the operation and management of such REO, (B)
hold all related revenues in a segregated account insured by the FDIC, (c)
remit all related revenues collected (net of such costs
37
and expenses retained by such Independent Contract) to the Servicer on a
monthly or more frequent basis; and
(iii) none of the provisions of this Section 3.08 relating to any
such contract or to actions taken through any such Independent Contractor
shall be deemed to relieve the Servicer of any of its duties and
obligations to the Trustee and the Holders with respect to the
conservation, protection and rental of any such REO.
The Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Servicer by such Independent
Contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. The Servicer or any Independent Contractor shall be
entitled to a fee, based on the prevailing market rate (and set in good faith at
a reasonable level in the case of a fee payable to the Servicer), for the
operation and management of any REO, which fee shall be an expense of the Trust
payable out of the gross income on such REO.
(c) The Servicer shall deposit all funds collected and received in
connection with the operation of any REO in the Custodial P&I Account no later
than the second Business Day following receipt of such funds.
(d) The Servicer, upon the final disposition of any REO, shall be entitled
to reimbursement of any related unreimbursed Advances related to the Mortgage
Asset for such REO as well as any unpaid Servicing Fees from Liquidation
Proceeds received in connection with the final disposition of such REO; provided
--------
that any such unreimbursed Advances as well as any unpaid Servicing Fees may be
----
reimbursed or paid, as the case may be, out of any net rental income or other
net amounts derived from such REO.
(e) The final disposition of REO shall be carried out by the Servicer at
the REO's fair market value under the circumstances existing at the time of
disposition and upon such terms and conditions as the Servicer shall deem
necessary or advisable, and as are in accordance with accepted servicing
practices and in accordance with Section 3.08(a).
(f) The Liquidation Proceeds from the final disposition of the REO shall
be deposited in the Custodial P&I Account no later than the second Business Day
following receipt of such Liquidation Proceeds and, subject to such withdrawals
as may be permitted by Section 3.08(d), shall be transferred to the Asset
Proceeds Account pursuant to Section 3.01(c).
(g) The Servicer shall prepare and file reports of foreclosure and
abandonment in accordance with Section 6050J of the Code.
(h) Notwithstanding any other provision of this Agreement, the Servicer,
acting on behalf of the Trustee hereunder, shall not rent, lease, or otherwise
earn income or take any action on behalf of the Trust with respect to any REO
that might (i) cause such REO to fail to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code or (ii) result in the
receipt by the REMIC of any "income from non-permitted assets" within the
meaning of Section 860F(a)(2) of the Code or any "net income from foreclosure
property" within the meaning of Section 860G(c)(2) of the Code, both of which
types of income are subject to tax under the
38
REMIC Provisions, unless the Trustee has received an Opinion of Counsel at the
Trust's expense (the costs of which shall be recoverable out of the Custodial
P&I Account), to the effect that, under the REMIC Provisions and any relevant
proposed legislation, any income generated for the REMIC by the REO would not
result in the imposition of a tax upon the REMIC.
Without limiting the generality of the foregoing, neither the Trustee, the
Master Servicer, nor a Servicer shall knowingly:
(i) enter into, renew or extend any New Lease with respect to any
REO, if the New Lease by its terms will give rise to any income that does
not constitute Rents from Real Property;
(ii) permit any amount to be received or accrued under any New Lease
other than amounts that will constitute Rents from Real Property;
(iii) authorize or permit any construction on any REO, other than the
completion of a building or other improvement thereon, and then only if
more than ten percent of the construction of such building or other
improvement was completed before default on the related Mortgage Asset
became imminent, all within the meaning of Section 856(e)(4)(B) of the
Code; or
(iv) Directly Operate, or allow any other Person to Directly Operate
any REO Property on any date more than 90 days after its acquisition date
(unless the Person who would Directly Operate the REO Property is an
Independent Contractor);
unless, in any such case, the Person proposing to take such action has
requested and received the Opinion of Counsel described in the preceding
sentence, in which case the Person may take such actions as are specified in
such Opinion of Counsel.
(i) The Servicer shall not acquire any personal property relating to any
Mortgage Asset pursuant to this Section 3.08 unless either:
(i) such personal property is incident to real property (within the
meaning of Section 856(e)(1) of the Code) so acquired by the Servicer; or
(ii) the Servicer shall have requested and received an Opinion of
Counsel, at the expense of the Trust (recoverable out of the Custodial P&I
Account), to the effect that the holding of such personal property by the
REMIC will not cause the imposition of a tax under the REMIC Provisions on
any REMIC related to the Trust or cause any such REMIC to fail to qualify
as a REMIC at any time that any Security is outstanding.
(j) Any actions required or permitted to be taken by a Servicer under this
Section 3.08 may be taken by the Master Servicer on behalf of such Servicer.
(i) Amendments to Servicing Agreements.
From time to time the Master Servicer may, to the extent permitted by the
applicable Servicing Agreement, make such modifications and amendments to the
Servicing Agreement as
39
the Master Servicer deems necessary or appropriate to confirm or carry out more
fully the intent and purpose of the Servicing Agreement and the duties,
responsibilities and obligations to be performed by the Servicer thereunder;
provided, however, that in no event shall the Master Servicer modify or amend
the Servicing Agreements if such modification or amendment would have a material
adverse effect on the Securityholders. Any such modification or amendment by the
Master Servicer shall be deemed to have a material adverse effect on the
Securityholders if such amendment or modification either results in (a) the
downgrading of the rating assigned by any Rating Agency to the Securities or (b)
the loss by the Trust or the assets thereof of REMIC status for federal income
tax purposes. Prior to the issuance of any modification or amendment, the Master
Servicer shall deliver to the Trustee an Officer's certificate setting forth (i)
the provision that is to be modified or amended, (ii) the modification or
amendment that the Master Servicer desires to issue and (iii) the reason or
reasons for such proposed amendment or modification.
Section 3.09. Oversight of Servicing.
The Master Servicer shall supervise, administer, monitor and oversee the
servicing of the Mortgage Assets by each Servicer and the performance by each
Servicer of all services, duties, responsibilities and obligations that are to
be observed or performed by the Servicer under its respective Servicing
Agreement. Without limiting the generality of the foregoing, the Master
Servicer, acting alone and without the consent of the Trustee or any
Securityholder, shall have the power and responsibility for approving the
transfer or other assignment of any Servicing Agreement by any Servicer. The
Company shall provide the Master Servicer with a copy of the Servicing Agreement
executed by each Servicer no later than the Closing Date for the applicable
Trust. The Master Servicer acknowledges that prior to taking certain actions
required to service the Mortgage Assets, the Servicing Agreement provides that
the Servicer must notify, consult with, obtain the consent of or otherwise
follow the instructions of the Master Servicer. The Master Servicer is also
given authority to waive compliance by the Servicer with certain provisions of
the Servicing Agreement. In each such instance, the Master Servicer shall
promptly instruct the Servicer or otherwise respond to the Servicer's request.
In no event will the Master Servicer instruct the Servicer to take any action,
give any consent to action by the Servicer or waive compliance by the Servicer
with any provision of the Servicing Agreement if any resulting action or failure
to act is inconsistent with the Servicers' obligations for similarly rated
transactions or would otherwise have an adverse effect on the Securityholders.
Any such action or failure to act shall be deemed to have an adverse effect on
the Securityholders if such action or failure to act either results in (a) the
downgrading of the rating assigned by any Rating Agency to the Securities or (b)
the loss by the Trust or the assets thereof of REMIC status for federal income
tax purposes.
The Master Servicer shall instruct each Servicer that it should not take
any action to foreclose, or accept a deed in lieu of foreclosure, with respect
to any Mortgage Asset that such Servicer knows, or has reason to know, that the
related Mortgaged Premises are contaminated with toxic wastes or other hazardous
substances.
During the term of the Pooling and Master Servicing Agreement, the Master
Servicer shall consult fully with each Servicer as may be necessary from time to
time to perform and carry out the Master Servicer's obligations hereunder and
receive, review and evaluate all
40
reports, information and other data that are provided to the Master Servicer by
each Servicer and otherwise exercise reasonable efforts to encourage each
Servicer to perform and observe the covenants, obligations and conditions to be
performed or observed by it under its Servicing Agreement.
For the purposes of determining whether any modification of a Mortgage
Asset shall be permitted by the Trustee or the Master Servicer, such
modification shall be construed as a substitution of the modified Mortgage Asset
for the Mortgage Asset originally deposited to the Trust. No modification shall
be approved unless either (i) such modification is occasioned by default or a
reasonably foreseeable default, or (ii) there is delivered to the Trustee an
Opinion of Counsel (at the expense of the party seeking to modify the Mortgage
Asset) to the effect that such modification would not be treated as giving rise
to a new debt instrument for federal income tax purposes.
The relationship of the Master Servicer to the Trustee under the Pooling
and Master Servicing Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer, partner or agent.
ARTICLE IV
REPORTING/REMITTING TO SECURITYHOLDERS
Section 4.01. Statements to Securityholders.
On or before the Master Servicer Reporting Date, the Master Servicer shall
prepare a statement as to such distribution and deliver such statement to the
Trustee. On such Distribution Date the Trustee shall forward such statement by
mail to each Securityholder, setting forth:
(a) the amount of such distribution to the Holders of Securities of such
Class to be applied to reduce the Security Principal Balance thereof, separately
identifying the amounts, if any, of any prepayments;
(b) the amount of such distribution to the Holders of Securities of such
Class allocable to interest, and the Pass-Through Rate applicable to each Class;
(c) the amount of the Master Servicing Fee to be paid to the Master
Servicer on such Distribution Date; and such other customary information as the
Master Servicer deems necessary or desirable, or which a Securityholder
reasonably requests, to enable Securityholders to prepare their tax returns;
(d) the aggregate amount of outstanding Advances, together with Non-
Recoverable Advances, if any, at the close of business on such Distribution
Date;
(e) the aggregate Scheduled Principal Balance of the Mortgage Assets as of
such Distribution Date and the number of Mortgage Assets outstanding on such
Distribution Date;
(f) the number and aggregate principal balance of Mortgage Assets (a)
delinquent two months (i.e., 60 to 89 days), (b) delinquent three months (i.e.,
90 days or longer) and (c) as to which foreclosure proceedings have been
commenced;
41
(g) the number and aggregate Unpaid Principal Balance of Mortgage Assets
that are REOs;
(h) the aggregate Security Principal Balance of each Class of Securities
after giving effect to the distribution to be made on such Distribution Date,
and separately identifying any reduction thereof on account of Realized Losses;
(i) the amount of Realized Losses incurred during the related Prepayment
Period and since the Cut-off Date (separately identifying any Mortgagor
Bankruptcy Losses, Special Hazard Losses and Fraud Losses, if they are
separately allocated);
(j) the amount of Month End Interest Shortfall, Soldiers' and Sailors'
Shortfall and Realized Interest Shortfall incurred during the related Due
Period;
(k) the aggregate amount of interest remaining unpaid (exclusive of
Shortfall and Realized Interest Shortfall allocated to such Class), if any, for
each Class of Securities, after giving effect to the distribution made on such
Distribution Date;
(l) the aggregate amount of withdrawals, if any, from any Reserve Fund or
under any Insurance Policy, and the amount, if any, available thereunder;
(m) the Senior Percentage and Senior Prepayment Percentage, if any, after
giving effect to the distributions to be made, and Realized Losses allocated, on
such Distribution Date; and
(n) in the case of a Trust with respect to which one or more REMIC
elections have been or will be made, any reports required to be provided to
Holders by the REMIC Provisions.
In the case of information furnished pursuant to clauses (a) and (b) above,
the amounts shall be expressed, with respect to any Security, as a dollar amount
per $1,000 denomination; provided, however, that if any Class of Securities does
not have a Security Principal Balance, then the amounts shall be expressed as a
dollar amount per 10% Percentage Interest.
In addition to the Distribution Date report specified above, the Master
Servicer shall prepare and deliver to the Trustee prior to each Distribution
Date, and the Trustee shall forward to each Holder of a Residual Security, if
any, on each Distribution Date a statement setting forth the amounts actually
distributed with respect to the Residual Securities on such Distribution Date,
the aggregate Security Principal Balance, if any, of the Residual Securities
after giving effect to any distribution made on such Distribution Date,
separately identifying the amount of Realized Losses allocated to such Residual
Securities for the preceding Prepayment Period.
Within a reasonable period of time after the end of each calendar year, the
Trustee shall prepare and furnish a statement, from information provided by the
Master Servicer, containing the information set forth in clauses (a) through (c)
above, to each Person who at any time during the calendar year was a Holder that
constituted a retail investor or other Holder that requests such statement,
aggregated for such calendar year or portion thereof during which such Person
was a Securityholder. Such obligation of the Trustee shall be deemed to have
been satisfied to the
42
extent that substantially comparable information shall be provided by the
Trustee pursuant to any requirements of the Code as from time to time are in
force.
Within a reasonable period of time after the end of each calendar year, the
Master Servicer shall prepare and the Trustee shall furnish to each Person who
at any time during the calendar year was a Holder of a Residual Security a
statement containing the information provided pursuant to the second preceding
paragraph aggregated for such calendar year thereof during which such Person was
a Securityholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time are in force.
Section 4.02. Remittance Reports.
The Master Servicer shall prepare the Remittance Report with respect to the
related Distribution Date and shall deliver it to the Trustee by mail, facsimile
or electronic transfer no later than each Master Servicer Reporting Date. The
Remittance Report shall set forth the information as specified in Exhibit C
---------
attached hereto. The information in such report shall be made available by the
Trustee to a Securityholder upon written request of such Securityholder
therefor.
In the event the Master Servicer does not furnish the Remittance Report or
any other statement or report as required by this Section 4.02 or Section 4.01,
or if an Officer of the Trustee has actual knowledge that any such Remittance
Report or other statement or report is erroneous or inaccurate in any material
respect, and if any such Remittance Report or other statement or report is not
furnished or corrected, as the case may be, within one Business Day following
the date it is due to be delivered, then the Trustee shall request and the
Master Servicer shall furnish by electromagnetic tape (or such other medium as
the Trustee and the Master Servicer may agree from time to time) the information
to enable the Trustee to prepare the Remittance Report and the other statements
and reports as required by this Section 4.02 and Section 4.01, and the Trustee
shall thereupon prepare such report and receive the Master Servicing Fee for
such month. Upon termination of the Master Servicer pursuant to Section 7.03
hereof, the Trustee shall thereafter undertake all of the obligations of the
Master Servicer pursuant to this Section 4.02 and Section 4.01 and shall be
entitled to the compensation otherwise payable to the Master Servicer pursuant
hereto in consideration of the performance of such obligations.
The Trustee shall be under no duty to recalculate, verify or recompute the
information provided to it hereunder by the Master Servicer.
Section 4.03. Compliance with Withholding Requirements.
Notwithstanding any other provisions of the Pooling and Master Servicing
Agreement, the Trustee shall comply with all federal withholding requirements
respecting payments to Securityholders of interest or original issue discount on
the Securities that the Trustee reasonably believes are applicable under the
Code. The consent of Securityholders shall not be required for such
withholding. In the event the Trustee does withhold any amount from interest or
original issue discount payments or Advances thereof to any Securityholder
pursuant to federal
43
withholding requirements, the Trustee shall indicate with any payment to such
Securityholders the amount withheld.
Section 4.04. Reports of Security Principal Balances to The Depository Trust
Company.
If and for so long as any Security is held by The Depository Trust Company,
on the second Business Day before each Distribution Date, the Trustee shall give
oral notice to The Depository Trust Company (and shall promptly thereafter
confirm in writing) the following: (a) the amount to be reported pursuant to
clause (a) and (b) of each statement provided to Holders of Securities pursuant
to Section 4.01 in respect of the next succeeding distribution, (b) the Record
Date for such distribution, (c) the Distribution Date for such distribution and
(d) the aggregate Security Principal Balance of each Class of Securities to be
reported pursuant to clause (h) of the first paragraph of Section 4.01 in such
month.
Section 4.05. Preparation of Regulatory Reports.
(a) Subject to the provisions of subsections (b) and (c) of this Section
4.05, the Master Servicer shall prepare or cause to be prepared, on behalf of
the Trust, and delivered in a timely manner to the Trustee for its review and
execution, such supplementary and periodic information, documents and reports
(such information, documents or reports are referred to hereinafter as "Periodic
Reports") as may be required pursuant to Section 12(g) or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), by the rules
and regulations of the Securities and Exchange Commission (the "SEC") thereunder
or as a condition to approval of any application for relief ("Application for
Relief") hereinafter referred to and, in connection therewith, shall prepare
such applications and requests for exemption and other relief from such
provisions as it may deem appropriate. The Master Servicer shall be deemed to
certify as to each Periodic Report delivered to the Trustee for its review and
execution that it conforms in all material respects to applicable reporting
requirements imposed by the Exchange Act or is otherwise in form and content
appropriate for filing with the SEC. The Trustee shall execute all such
Periodic Reports and Applications for Relief delivered as provided above and
shall return the same to the Master Servicer for filing with the SEC and other
required filing offices, if any, on behalf of the Trust or shall authorize the
Master Servicer to execute any such Periodic Report or Application for Relief on
the Trustee's behalf.
(b) Within 30 days after the beginning of the first fiscal year of the
Trust during which the obligation to file Periodic Reports pursuant to the
Exchange Act shall have been suspended, the Master Servicer shall prepare, or
cause to be prepared, a notice on SEC Form 15 ("Form 15") and shall forward such
notice to the Trustee for execution, whereupon the Trustee shall return the
executed Form 15 to the Master Servicer or shall authorize the Master Servicer
to execute such Form 15 on the Trustee's behalf; provided, however, that the
Master Servicer shall be under no obligation to prepare such notice if the
number of Securityholders exceeds 300. The Trustee shall notify the Master
Servicer in a timely manner if the number of Securityholders at any one time
exceeds 300. The Master Servicer shall file any notice on Form 15 with the SEC
in accordance with the provisions of Rule 15d-6 under the Exchange Act.
Notwithstanding any other provision of this Agreement, the Trustee has not
assumed, and shall not by its performance hereunder be deemed to have assumed,
any of the duties or
44
obligations of the Company or any other Person with respect to (i) the
registration of the Securities pursuant to the Securities Act, (ii) the issuance
or sale of the Securities, or (iii) compliance with the provisions of the
Securities Act, the Exchange Act, or any applicable federal or state securities
or other laws including, without limitation, any requirement to update the
registration statement or prospectus relating to the Securities in order to
render the same not materially misleading to investors.
(c) In connection with the Master Servicer's preparation of any Form 15 or
of any Periodic Report, the Trustee shall provide it with information which it
may reasonably request concerning the number and identity of the Holders
appearing on the Security Register maintained by the Trustee, but the Trustee
shall have no duty or obligation to provide information which does not appear on
the Security Register, including any information concerning the ownership of
Persons for whom a nominee is the Holder of record.
ARTICLE V
THE POOLING INTERESTS AND THE SECURITIES
Section 5.01. Pooling REMIC Interests.
If an election has been made to treat certain assets of the Trust as a
Pooling REMIC, the Pooling and Master Servicing Agreement will set forth the
terms of the Regular Interests and Residual Interest of the Pooling REMIC.
Unless otherwise specified in the Pooling and Master Servicing Agreement, (a)
the Pooling REMIC Regular Interests will be "regular interests" for purposes of
the REMIC Provisions but will not constitute securities or certificates of
interest in the Trust; (b) the Trustee will be the owner of the Pooling REMIC
Regular Interests, which may not be transferred to any person other than a
successor trustee appointed pursuant to Section 8.07 hereof unless the party
desiring the transfer obtains a Special Tax Opinion; and (c) the Pooling REMIC
Regular Interests will be represented by Pooling REMIC Subaccounts.
Section 5.02. The Securities.
The Securities shall be designated in the Pooling and Master Servicing
Agreement. The Securities in the aggregate will represent the entire beneficial
ownership interest in the Trust Estate. On the Closing Date, the aggregate
Security Principal Balance of the Securities will equal the aggregate Scheduled
Principal Balance of the Mortgage Assets as of the Cut-off Date. The Securities
will be substantially in the forms annexed to the Pooling and Master Servicing
Agreement. Unless otherwise provided in the Pooling and Master Servicing
Agreement, the Securities of each Class will be issuable in registered form, in
denominations of authorized Percentage Interests as described in the definition
thereof. Each Security will share ratably in all rights of the related Class.
Upon original issue, the Securities shall be executed and delivered by the
Trustee and the Trustee shall cause the Securities to be authenticated by the
Security Registrar to or upon the order of the Company upon receipt by the
Trustee of the documents specified in Section 2.01. The Securities shall be
executed and attested by manual or facsimile signature on behalf of the Trustee
by an authorized Officer under its seal imprinted thereon. Securities bearing
the manual or facsimile signatures of individuals who were at any time the
proper Officers of the Trustee
45
shall bind the Trustee, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the authentication and delivery of
such Securities or did not hold such offices at the date of such Securities. No
Security shall be entitled to any benefit under this Agreement or be valid for
any purpose, unless there appears on such Security a certificate of
authentication substantially in the form provided in the Pooling and Master
Servicing Agreement executed by the Security Registrar by manual signature, and
such certificate of authentication shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder. All Securities shall be dated the date of their execution.
Section 5.03. Book-Entry Securities.
(a) The Book-Entry Securities will be represented initially by one or more
certificates registered in the name designated by the Clearing Agency. The
Company, the Master Servicer and the Trustee may for all intents and purposes
(including the making of payments on the Book-Entry Securities) deal with the
Clearing Agency as the authorized representative of the Beneficial Owners of the
Book-Entry Securities for as long as those Securities are registered in the name
of the Clearing Agency. The rights of Beneficial Owners of the Book-Entry
Securities shall be limited to those established by law and agreements between
such Beneficial Owners and the Clearing Agency and Clearing Agency Participants.
The Beneficial Owners of the Book-Entry Securities shall not be entitled to
certificates for the Book-Entry Securities as to which they are the Beneficial
Owners, except as provided in subsection (c) below. Requests and directions
from, and votes of, the Clearing Agency, as Holder, shall not be deemed to be
inconsistent if they are made with respect to different Beneficial Owners.
Without the consent of the Company, the Master Servicer and the Trustee, a Book-
Entry Security may not be transferred by the Clearing Agency except to another
Clearing Agency that agrees to hold the Book-Entry Security for the account of
the respective Clearing Agency Participants and Beneficial Owners.
(b) Neither the Company, the Master Servicer, nor the Trustee will have
any liability for any aspect of the records relating to or payment made on
account of Beneficial Owners of the Book-Entry Securities held by the Clearing
Agency, for monitoring or restricting any transfer of beneficial ownership in a
Book-Entry Security or for maintaining, supervising or reviewing any records
relating to such Beneficial Owners.
(c) The Book-Entry Securities will be issued in fully registered,
certificated form to Beneficial Owners of Book-Entry Securities or their
nominees, rather than to the Clearing Agency or its nominee, only if (a) the
Company advises the Trustee in writing that the Clearing Agency is no longer
willing or able to discharge properly its responsibilities as depository with
respect to the Book-Entry Securities, and the Company is unable to locate a
qualified successor within 30 days or (b) the Company, at its option, elects to
terminate the book-entry system operating through the Clearing Agency. Upon the
occurrence of either such event, the Trustee shall notify the Clearing Agency,
which in turn will notify all Beneficial Owners of Book-Entry Securities through
Clearing Agency Participants, of the availability of certificated Securities.
Upon surrender by the Clearing Agency of the certificates representing the Book-
Entry Securities and receipt of instructions for re-registration, the Trustee
will reissue the Book-Entry Securities as certificated Securities to the
Beneficial Owners identified in writing by the Clearing Agency. Such
certificated Securities shall not constitute Book-Entry Securities. All
reasonable
46
costs associated with the preparation and delivery of certificated Securities
shall be borne by the Company.
Section 5.04. Registration of Transfer and Exchange of Securities.
The Trustee shall cause to be kept at its Corporate Trust Office a Security
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee shall provide for the registration of Securities and of transfers
and exchanges of Securities as herein provided. The Trustee will initially
serve as Security Registrar for the purpose of registering Securities and
transfers and exchanges of Securities as herein provided.
Subject to Section 5.05, upon surrender for registration of transfer of any
Security at the Corporate Trust Office of the Trustee or at any other office or
agency of the Trustee maintained for such purpose, the Trustee shall execute and
the Security Registrar shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of the same
Class of a like aggregate Percentage Interest.
At the option of the Securityholders, each Security may be exchanged for
other Securities of the same Class with the same and authorized denominations
and a like aggregate Percentage Interest, upon surrender of such Security to be
exchanged at any such office or agency. Whenever any Securities are so
surrendered for exchange, the Trustee shall execute and cause the Security
Registrar to authenticate and deliver the Securities which the Securityholder
making the exchange is entitled to receive. Every Security presented or
surrendered for transfer or exchange shall (if so required by the Trustee) be
duly endorsed by, or be accompanied by a written instrument of transfer in the
form satisfactory to the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing.
No service charge to the Securityholders shall be made for any transfer or
exchange of Securities, 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 Securities.
All Securities surrendered for transfer and exchange shall be destroyed by
the Security Registrar.
The Trustee will cause the Security Registrar (unless the Trustee is acting
as Security Registrar) to provide notice to the Trustee of each transfer of a
Security, and will provide the Trustee and Master Servicer with an updated copy
of the Security Register on January 1 and July 1 of each year.
Section 5.05. Restrictions on Transfer.
(a) Securities Law Compliance. No transfer of any Private Security shall
-------------------------
be made unless that transfer is made pursuant to an effective registration
statement under the Securities Act and effective registration or qualification
under applicable state securities laws, or is made in a transaction that does
not require such registration or qualification. Any Holder of a Private
Security shall, and, by acceptance of such Security, does agree to, indemnify
the Company, the Trustee and the Master Servicer against any liability that may
result if any transfer of such
47
Securities by such Holder is not exempt from registration under the Securities
Act and all applicable state securities laws or is not made in accordance with
such federal and state laws. Neither the Company, the Trustee nor the Master
Servicer is obligated to register or qualify any Private Security under the
Securities Act or any other securities law or to take any action not otherwise
required under this Agreement to permit the transfer of such Securities without
such registration or qualification. The Trustee shall not register any transfer
of a Private Security (other than a Residual Security) unless and until the
prospective transferee provides the Trustee with a Transferee Agreement or, if
the Security to be transferred is a Rule 144A Security, a Rule 144A Agreement
certifying to facts which, if true, would mean that the proposed transferee is a
Qualified Institutional Buyer, and unless and until the transfer otherwise
complies with the provisions of this Section 5.05. If a proposed transfer does
not involve a Rule 144A Security or the transferee of a Rule 144A Security does
not certify to facts which, if true, would mean that the transferee is a
Qualified Institutional Buyer, the Trustee shall require that the transferor and
transferee certify as to the factual basis for the registration exemption(s)
relied upon, and if the transfer is made within three years of the acquisition
thereof by a non-Affiliate of the Company from the Company or an Affiliate of
the Company, the Master Servicer or the Trustee also may require an Opinion of
Counsel that such transfer may be made without registration or qualification
under the Securities Act and applicable state securities laws, which Opinion of
Counsel shall not be obtained at the expense of the Company, the Trustee or the
Master Servicer. Notwithstanding the foregoing, no Rule 144A Agreement,
Transferee Agreement or Opinion of Counsel shall be required in connection with
the initial transfer of the Private Securities and no Opinion of Counsel shall
be required in connection with the transfer of the Private Securities by a
broker or dealer, if such broker or dealer was the initial transferee.
The Company shall provide to any Holder of a Rule 144A Security and any
prospective transferee designated by such Holder information regarding the
related Securities and the Mortgage Assets and such other information as shall
be necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for transfer of any such Security without registration thereof under
the Securities Act pursuant to the registration exemption provided by Rule 144A.
(b) Regular Securities.
------------------
(i) Book-Entry Subordinated Securities. No Regular Security that (i)
is a Book-Entry Security and (ii) is subordinated in right to payment to
the Securities of any other Class due to the allocation of Realized Losses
(a "Book-Entry Subordinated Security") shall be transferred to a transferee
that acknowledges that it is a Plan Investor unless such transferee
provides the Trustee and the Master Servicer with a Benefit Plan Opinion.
The transferee of a Book-Entry Subordinated Security that does not provide
the Trustee and the Master Servicer with a Benefit Plan Opinion will be
deemed, by virtue of its acquisition of such Security, to have represented
that it is not a Plan Investor.
(ii) Certificated Subordinated Securities. No Regular Security that
(i) is not a Book-Entry Security and (ii) is subordinated in right to
payment to the Securities of any other Class due to the allocation of
Realized Losses (a "Certificated Subordinated Security") shall be
transferred unless the prospective transferee provides the Trustee and the
Master Servicer with a properly completed Benefit Plan Affidavit, together
with a Benefit Plan Opinion if required in order to comply with such
Affidavit.
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(c) Residual Securities. No Residual Security (including any beneficial
-------------------
interest therein) may be transferred to a Disqualified Organization. In
addition, no Residual Security (including any beneficial interest therein) may
be transferred unless (i) the proposed transferee provides the Trustee and the
Master Servicer with (A) a Residual Transferee Agreement, (B) a Benefit Plan
Affidavit, (C) a Disqualified Organization Affidavit, and (D) if the proposed
transferee is a Non-U.S. Person, a TAPRI Certificate, and (ii) the interest
transferred involves the entire interest in a Residual Security or an undivided
interest therein (unless the transferor or the transferee provides the Master
Servicer and the Trustee with an Opinion of Counsel (which shall not be an
expense of the Master Servicer or the Trustee) that the transfer will not
jeopardize the REMIC status of any related REMIC). Furthermore, if a proposed
transfer involves a Private Security, (1) the Trustee shall require that the
transferor and transferee certify as to the factual basis for the registration
exemption(s) relied upon, and (2) if the transfer is made within three years
from the acquisition of the Security by a non-Affiliate of the Company from the
Company or an Affiliate of the Company, the Trustee also may require an Opinion
of Counsel that such transfer may be made without registration or qualification
under the Securities Act and applicable state securities laws, which Opinion of
Counsel shall not be obtained at the expense of the Trustee or the Master
Servicer. In any event, the Trustee shall not effect any transfer of a Residual
Security except upon notification of such transfer to the Master Servicer.
Notwithstanding the foregoing, no Opinion of Counsel shall be required in
connection with the initial transfer of the Residual Securities or their
transfer by a broker or dealer, if such broker or dealer was the initial
transferee. Notwithstanding the fulfillment of the prerequisites described
above, the Trustee may refuse to recognize any transfer to the extent necessary
to avoid a risk of disqualification of any related REMIC as a REMIC or the
imposition of a tax upon any such REMIC.
Upon notice to the Trustee that any legal or beneficial interest in any
portion of the Residual Securities has been transferred, directly or indirectly,
to a Disqualified Organization or agent thereof (including a broker, nominee, or
middleman) in contravention of the foregoing restrictions, (i) such transferee
shall be deemed to hold the Residual Security in constructive trust for the last
transferor who was not a Disqualified Organization or agent thereof, and such
transferor shall be restored as the owner of such Residual Certificate as
completely as if such transfer had never occurred, provided that the Trustee
may, but is not required to, recover any distributions made to such transferee
with respect to the Residual Security and return such recovery to the
transferor, and (ii) the Trustee agrees to furnish to the Internal Revenue
Service and to any transferor of the Residual Security or such agent (within 60
days of the request therefor by the transferor or agent) such information
necessary for the computation of the tax imposed under Section 860E(e) of the
Code and as otherwise may be required by the Code, including but not limited to
the present value of the total anticipated excess inclusions with respect to the
Residual Security (or portion thereof) for periods after such transfer. At the
election of the Trustee, the cost to the Trustee of computing and furnishing
such information may be charged to the transferor or such agent referred to
above; however, the Trustee shall in no event be excused from furnishing such
information.
If a tax or a reporting cost is borne by the REMIC as a result of the
transfer of a Residual Security or any beneficial interest therein in violation
of the restrictions set forth in this Section, the transferor shall pay such tax
or cost and, if such tax or cost is not so paid, the Trustee, upon notification
from the Master Servicer, shall pay such tax or cost with amounts that otherwise
49
would have been paid to the transferee of the Residual Security (or beneficial
interest therein). In that event, neither the transferee nor the transferor
shall have any right to seek repayment of such amounts from the Company, the
Trustee, the REMIC, the Master Servicer, or the other Holders of any of the
Securities, and none of such parties shall have any liability for payment of any
such tax or reporting cost. In the event that a Residual Security is
transferred to a Disqualified Organization, the Master Servicer shall make, or
cause to be made, available the information necessary for the computation of the
excise tax imposed under Section 860E(e) of the Code.
Section 5.06. Mutilated, Destroyed, Lost or Stolen Securities.
If (a) any mutilated Security is surrendered to the Trustee or the Security
Registrar, or the Trustee and the Security Registrar receive evidence to their
satisfaction of the destruction, loss or theft of any Security, and (b) there is
delivered to the Trustee and the Security Registrar such security or indemnity
as may be required by them to save each of them harmless, then, in the absence
of actual knowledge by the Trustee or the Security Registrar that such Security
has been acquired by a bona fide purchaser, the Trustee shall execute and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Security, a new Security of the same Class and of like tenor and
Percentage Interest. Upon the issuance of any new Security under this Section,
the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Security Registrar) connected
therewith. Any replacement Security issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the destroyed, lost or stolen Security shall
be found at any time.
Section 5.07. Persons Deemed Owners.
Prior to due presentation of a Security for registration of transfer, the
Trustee, the Security Registrar and any agent of any of them may treat the
person in whose name any Security is registered as the owner of such Security
for the purpose of receiving distributions and for all other purposes
whatsoever, and neither the Trustee, the Security Registrar nor any agent of any
of them shall be affected by notice to the contrary.
Section 5.08. Appointment of Paying Agent.
The Trustee may appoint a Paying Agent for the purpose of making
distributions to Securityholders. The Trustee shall cause such Paying Agent to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums held by
it for the payment to Securityholders in an Eligible Account in trust for the
benefit of the Securityholders entitled thereto until such sums shall be paid to
the Securityholders. All funds remitted by the Trustee to any such Paying Agent
for the purpose of making distributions shall be paid to Securityholders on each
Distribution Date and any amounts not so paid shall be returned on such
Distribution Date to the Trustee.
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ARTICLE VI
THE COMPANY AND THE MASTER SERVICER
Section 6.01. Liability of the Company and the Master Servicer.
The Company and the Master Servicer shall each be liable in accordance
herewith only to the extent of the respective obligations specifically imposed
by the Pooling and Master Servicing Agreement and undertaken by the Company and
the Master Servicer under the Pooling and Master Servicing Agreement.
Section 6.02. Merger or Consolidation of the Company or the Master Servicer.
Subject to the following paragraph, the Company and the Master Servicer
each will keep in full effect its corporate existence, rights and franchises
under the laws of the jurisdiction of its organization, and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of the Pooling and Master Servicing Agreement, the Securities or
any of the Mortgage Assets and to perform its respective duties under the
Pooling and Master Servicing Agreement.
The Company or the Master Servicer may be merged or consolidated with or
into any Person, or transfer all or substantially all of their respective assets
to any Person, in which case any Person resulting from any merger or
consolidation to which the Company or the Master Servicer shall be a party, or
any Person succeeding to the business of the Company or the Master Servicer,
shall be the successor of the Company or the Master Servicer, as the case may
be, without the execution or filing of any paper or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding.
Section 6.03. Limitation on Liability of the Company, the Master Servicer and
Others.
Neither the Company, the Master Servicer nor any of the directors,
officers, employees or agents of either entity shall be under any liability to
the Trust or the Securityholders and all such Persons shall be held harmless for
any action taken or for refraining from the taking of any action in good faith
pursuant to the Pooling and Master Servicing Agreement, or for errors in
judgment; provided, however, that this provision shall not protect any such
Person against any breach of warranties or representations made herein or
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties or by reason
of reckless disregard of obligations and duties hereunder. The Company, the
Master Servicer and any of the directors, officers, employees or agents of
either may rely in good faith on any document of any kind which, prima facie, is
properly executed and submitted by any Person respecting any matters arising
hereunder. Neither the Company nor the Master Servicer shall be under any
obligation to appear in, prosecute or defend any legal action unless such action
is related to its respective duties under the Pooling and Master Servicing
Agreement and which in its opinion does not involve it in any expense or
liability, except as provided in Section 10.01(b); provided, however, that the
Company or the Master Servicer may each in its discretion undertake any such
action that it deems necessary or desirable with respect to the Pooling and
Master Servicing Agreement and the rights and duties of the parties thereto and
the interests of the Securityholders thereunder if the Securityholders offer to
51
the Company or the Master Servicer, as the case may be, reasonable security or
indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby.
Section 6.04. Resignation of the Master Servicer.
The Master Servicer shall not resign from the obligations and duties hereby
imposed on it except (a) upon appointment of a successor master servicer and
receipt by the Trustee of a letter from each Rating Agency that such a
resignation and appointment will not, in and of itself, result in a downgrading
of any rated Securities or (b) upon determination that its duties hereunder are
no longer permissible under applicable law. Any such determination permitting
the resignation of the Master Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee. No such resignation shall
become effective until the Trustee or a successor master servicer shall have
become the successor master servicer hereunder and agreed to perform the
responsibilities, duties, liabilities and obligations of a Master Servicer that
arise thereafter; provided, however, that any successor shall not (unless
otherwise agreed) assume any liability for the actions (or failure to act) of
the Master Servicer prior to the date that the successor becomes Master Servicer
under the Pooling and Master Servicing Agreement.
Section 6.05. Compensation to the Master Servicer.
The Master Servicer shall be entitled to receive a monthly fee as
compensation for services rendered by the Master Servicer under each Pooling and
Master Servicing Agreement, which may be retained by the Master Servicer when it
remits funds from the Master Servicer Custodial Account to the Asset Proceeds
Account. The monthly Master Servicing Fee with respect to any Trust shall equal
the amount set forth in the Pooling and Master Servicing Agreement. The Master
Servicing Fee shall be payable from amounts received with respect to the
Mortgage Assets. The Master Servicer also will be entitled, as additional
compensation, to any late reporting fees paid by a Servicer, as well as net
investment earnings on the Master Servicer Custodial Account, the Asset Proceeds
Account and any Reserve Funds that it is considered to own pursuant to the
Pooling and Master Servicing Agreement.
Section 6.06. Assignment or Delegation of Duties by the Master Servicer.
Except as expressly provided in any Pooling and Master Servicing Agreement,
the Master Servicer shall not assign or transfer any of its rights, benefits or
privileges under the Pooling and Master Servicing Agreement to any other Person,
or delegate to or subcontract with, or authorize or appoint any other Person to
perform any of the duties, covenants or obligations to be performed by the
Master Servicer under the Pooling and Master Servicing Agreement, without the
prior written consent of the Trustee, and any agreement, instrument or act
purporting to effect any such assignment, transfer, delegation or appointment
shall be void. Notwithstanding the foregoing, the Master Servicer shall have
the right without the prior written consent of the Trustee to delegate to,
subcontract with, authorize, or appoint an affiliate of the Master Servicer to
perform and carry out any duties, covenants or obligations to be performed and
carried out by the Master Servicer under the Pooling and Master Servicing
Agreement and hereby agrees so to delegate, subcontract, authorize or appoint to
an affiliate of the Master Servicer any duties, covenants or obligations to be
performed and carried out by the Master Servicer under the Pooling and Master
Servicing Agreement to the extent that such duties,
52
covenants or obligations are to be performed in any state or states in which the
Master Servicer is not authorized to do business but in which the affiliate is
so authorized. In no case, however, shall any permitted assignment relieve the
Master Servicer of any liability to the Trustee or the Company under the Pooling
and Master Servicing Agreement.
ARTICLE VII
TERMINATION OF SERVICING AND MASTERSERVICING ARRANGEMENTS
Section 7.01. Termination and Substitution of Servicing Agreements.
Upon the occurrence of any event for which a Servicer may be terminated
pursuant to a Servicing Agreement, the Master Servicer shall promptly deliver to
the Company and the Trustee a certification by an Officer that an event has
occurred that may justify termination of a Servicing Agreement, describing the
circumstances surrounding such event and directing what action should be taken
by the Trustee with respect to the Servicer. If the Master Servicer directs
that the Servicing Agreement with the Servicer be terminated, the Master
Servicer's certification must state that the breach is material and not merely
technical in nature. Upon written direction of the Master Servicer, based upon
such certification, the Trustee, as assignee of the Servicing Agreement, shall
promptly terminate such Servicing Agreement and, as provided in the succeeding
paragraph, the Master Servicer shall concurrently therewith either enter into a
substitute Servicing Agreement or appoint another Servicer to enter into a
substitute Servicing Agreement.
The Master Servicer shall indemnify the Trustee and hold the Trustee
harmless from and against all claims, liabilities, costs and expenses
(including, without limitation, reasonable attorneys' fees) arising out of, or
assessed against the Trustee in connection with, termination of any Servicing
Agreement at the direction of the Master Servicer. If the Trustee terminates
any such Servicing Agreement, the Trustee shall enter into a substitute
Servicing Agreement with the Master Servicer or, at the Master Servicer's
direction, with another mortgage loan service company acceptable to the Master
Servicer and each Rating Agency under which such mortgage loan service company
or the Master Servicer, as the case may be, shall assume, satisfy, perform and
carry out all liabilities, duties, responsibilities and obligations that are to
be, or otherwise were to have been, satisfied, performed and carried out by the
Servicer under such terminated Servicing Agreement. Until such time as the
Trustee enters into a substitute servicing agreement with respect to the
Mortgage Assets, the Master Servicer shall assume, satisfy, perform and carry
all obligations which otherwise were to have been satisfied, performed and
carried out by the Servicer under the terminated Servicing Agreement. However,
in no event shall the Master Servicer be deemed to have assumed the obligations
of a Servicer to purchase any Mortgage Asset from the Trust or to make Advances
with respect to any Mortgage Asset, except to the extent specifically provided
in Section 3.03 hereof. As compensation to the Master Servicer for any
servicing obligations fulfilled or assumed by the Master Servicer, the Master
Servicer shall be entitled to any servicing compensation to which the Servicer
would have been entitled if the Servicing Agreement with the Servicer had not
been terminated. It is understood that any such substitute Servicing Agreement
need not contain a covenant by the substitute Servicer to purchase Converted
Mortgage Loans.
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Section 7.02. Termination of Master Servicer; Trustee to Act.
Each of the following shall constitute an Event of Default by the Master
Servicer of its obligations hereunder:
(a) any failure on the part of the Master Servicer to duly observe or
perform in any material respect any of the covenants or agreements on the part
of the Master Servicer (other than its obligation to make an Advance pursuant to
Section 3.04 hereof) contained in the Pooling and Master Servicing Agreement
which continues unremedied for a period of 30 days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Master Servicer by the Trustee, or to the Master Servicer and
the Trustee by the Holders of Securities entitled to at least 25% of the Voting
Rights; or
(b) a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or 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; or
(c) 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 its property; or
(d) the Master Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(e) any failure of the Master Servicer to remit funds in the Master
Servicer Custodial Account to the Asset Proceeds Account required by Section
3.01(c) within one Business Day of the date that such funds are due; or
(f) any failure of the Master Servicer to make any Advance or other
payment required by Sections 3.04 or 3.05 within one Business Day of the date
that it is due.
The rights and obligations of the Master Servicer under the Pooling and
Master Servicing Agreement may be terminated only upon the occurrence of an
Event of Default. If an Event of Default described in clauses (a) through (d)
of this Section shall occur, then, and in each and every such case, so long as
such Event of Default shall not have been remedied, the Trustee may, and at the
direction of the Holders of Securities entitled to at least 51% of Voting
Rights, the Trustee shall, by notice in writing to the Master Servicer terminate
all of the rights and obligations of the Master Servicer under the Pooling and
Master Servicing Agreement, other than its rights as a Securityholder. If an
Event of Default described in clauses (e) and (f) hereof shall occur, the
Trustee may, by notice in writing to the Master Servicer, terminate all of the
rights and obligations of the Master Servicer under the Pooling and Master
Servicing Agreement, other than
54
its rights as a Securityholder. On or after the 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 Securities (other than as a Holder
thereof) or the Mortgage Assets or otherwise, shall, to the maximum extent
permitted by law, pass to and be vested in the Trustee pursuant to and under
this Section (provided, however, that the Master Servicer shall continue to be
entitled to receive all amounts accrued or owing to it under the Pooling and
Master Servicing Agreement on or prior to the date of such termination). Without
limiting the generality of the foregoing, the Trustee is hereby authorized and
empowered to execute and deliver on behalf of and at the expense of the Master
Servicer, as the Master Servicer's attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things that in the Trustee's sole and absolute judgment may be necessary or
appropriate to effect such termination. Notwithstanding the foregoing, upon any
such termination the Master Servicer shall do all things reasonably requested by
the Trustee to effect the termination of the Master Servicer's responsibilities,
rights and powers thereunder, and the transfer thereof to the Trustee,
including, without limitation, promptly providing to the Trustee (and in no
event later than ten Business Days subsequent to such notice) all documents and
records electronic and otherwise reasonably requested by the Trustee to enable
the Trustee or its designee to assume and carry out the duties and obligations
that otherwise were to have been performed and carried out by the Master
Servicer thereunder but for such termination.
Upon such termination, the Trustee shall, to the maximum extent permitted
by law, be the successor in all respects to the Master Servicer in its capacity
as master servicer under the Pooling and Master Servicing Agreement, but the
Trustee shall not have any liability for, or any duty or obligation to perform,
any duties or obligations of the Master Servicer required to be performed prior
to the date that the Trustee becomes successor master servicer. As compensation
therefor, the Trustee shall be entitled to the fees to which the Master Servicer
would have been entitled if the Master Servicer had continued to act as such.
The Trustee shall also, as successor master servicer, be entitled to all of the
protections and indemnification afforded to the Master Servicer pursuant to
Section 6.03 hereof.
Notwithstanding the above, the Trustee may, upon an Event of Default by the
Master Servicer, if it shall be unwilling so to act, or shall, if it is unable
so to act or if the Holders of Securities entitled to at least 51% of the Voting
Rights so request in writing to the Trustee, promptly appoint, or petition a
court of competent jurisdiction to appoint, any established mortgage loan
servicing institution acceptable to the Rating Agency and having a net worth of
not less than $15,000,000 as the successor to the Master Servicer in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Master Servicer thereunder. No appointment of a successor to the Master
Servicer shall be effective until the assumption by the successor to the Master
Servicer of all future responsibilities, duties and liabilities of the Master
Servicer under the Pooling and Master Servicing Agreement. Pending appointment
of a successor to the Master Servicer hereunder, the Trustee or an affiliate
shall, to the maximum extent permitted by law, act in such capacity as
hereinabove provided.
In connection with such appointment and assumption described herein, the
Trustee may make such arrangements for the compensation of such successor out of
payments received on the assets included in the Trust Estate as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the Master Servicer hereunder. The
55
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
Upon any Event of Default described hereunder, the Trustee, in addition to
the rights specified in this Section, shall have the right, in its own name and
as Trustee, to take all actions now or hereafter existing at law, in equity or
by statute to enforce its rights and remedies and to protect the interests, and
enforce the rights and remedies of the Securityholders (including the
institution and prosecution of all judicial, administrative and other
proceedings and the filings of proofs of claim and debt in connection
therewith). No remedy provided for by the Pooling and Master Servicing
Agreement shall be exclusive of any other remedy, and each and every remedy
shall be cumulative and in addition to any other remedy and no delay or omission
to exercise any right or remedy shall impair any such right or remedy or shall
be deemed to be a waiver of any Event of Default.
For the purposes of this Section 7.02, the Trustee shall not be deemed to
have knowledge of an Event of Default hereunder unless an Officer of the Trustee
has actual knowledge thereof or unless written notice of any event which is an
Event of Default is received by the Trustee and such notice references the
Securities or the Trust.
Section 7.03. Notification to Securityholders.
(a) Upon any termination pursuant to Section 7.01 or 7.02 above or
appointment of a successor to the Servicer or the Master Servicer, the Trustee
shall give prompt written notice thereof to Securityholders at their respective
addresses appearing in the Security Register.
(b) Within 60 days after the occurrence of any Event of Default involving
the Master Servicer or, with respect to a Servicer, the Trustee's receipt of
notice of the occurrence of any event permitting termination of such Servicer,
the Trustee shall transmit by mail to all Holders of Securities notice of each
such Event of Default or occurrence known to the Trustee, unless such default
shall have been cured or waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and after the
curing of any such Events of Default, undertakes to perform such duties and only
such duties as are specifically set forth in the Pooling and Master Servicing
Agreement. During an Event of Default of which the Trustee has notice, the
Trustee shall exercise such of the rights and powers vested in it by the Pooling
and Master Servicing Agreement, and use the same degree of care and skill in
their exercise as a prudent man would exercise or use under the circumstances in
the conduct of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of the Pooling and Master Servicing Agreement, shall examine them to
determine whether they conform to the requirements of the Pooling and Master
56
Servicing Agreement; provided, however, that the Trustee shall be under no duty
to recalculate, verify or recompute the information provided to it hereunder by
the Company or the Master Servicer. If any such instrument is found not to
conform to the requirements of the Pooling and Master Servicing Agreement in a
material manner, the Trustee shall take action as it deems appropriate to have
the instrument corrected, and if the instrument is not corrected to the
Trustee's satisfaction, the Trustee will provide notice thereof to the
Securityholders.
No provision of the Pooling and Master Servicing 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:
(a) Prior to the occurrence of an Event of Default with respect to the
Master Servicer, and after the curing of any such Event of Default, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of the Pooling and Master Servicing Agreement, the Trustee shall not
be liable except for the performance of such duties and obligations as are
specifically set forth in the Pooling and Master Servicing Agreement, no implied
covenants or obligations shall be read into the Pooling and Master Servicing
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 that conform to the
requirements of the Pooling and Master Servicing Agreement;
(b) The Trustee shall not be personally liable for an error of judgment
made in good faith by an Officer of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;
(c) 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 Holders of Securities entitled to at least 25% of the Voting
Rights 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 the Pooling and Master Servicing Agreement;
(d) Any determination of negligence or bad faith of the Trustee shall be
made only upon a finding that there is clear and convincing evidence (and not
upon the mere preponderance of evidence) thereof in a proceeding before a court
of competent jurisdiction in which the Trustee has had an opportunity to defend;
and
(e) In no event shall the Trustee be held liable for the actions or
omissions of the Master Servicer or Servicer (excepting the Trustee's own
actions as Master Servicer or Servicer), and in connection with any action or
claim or recovery sought against the Trustee based upon facts involving the acts
or omissions of the Master Servicer or the Company, or involving any allegation
or claim of liability or recovery against the Trustee by the Master Servicer or
by the Seller, the Trustee shall not be held to a greater standard of care than
the Master Servicer or Seller would be held in such situation. Other than those
obligations assumed by the Trustee pursuant to Sections 3.04, 3.05, 4.02 and
7.02 hereof, no provision of the Pooling and Master Servicing Agreement shall
require the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or in the
exercise of any
57
of its rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it unless such risk or liability relates to duties set
forth herein (which duties shall not be deemed to include actions required to be
taken by the Trustee arising out of the failure of another person to take any
required action hereunder).
Section 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01 hereof:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, 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. Further, the Trustee may accept a copy of the vote of the Board
of Directors of any party certified by its clerk or assistant clerk or
secretary or assistant secretary as conclusive evidence of the authority of
any person to act in accordance with such vote, and such vote may be
considered as in full force and effect until receipt by the Trustee of
written notice to the contrary;
(ii) The Trustee may, in the absence of bad faith on its part, rely
upon a certificate of an Officer of the appropriate Person whenever in the
administration of the Pooling and Master Servicing Agreement the Trustee
shall deem it desirable that a matter be proved or established (unless
other evidence be herein specifically prescribed) prior to taking,
suffering or omitting any action hereunder;
(iii) The Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such written
advice or Opinion of Counsel;
(iv) The Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by the Pooling and Master Servicing Agreement
or to institute, conduct or defend any litigation thereunder or in relation
thereto at the request, order or direction of any of the Securityholders,
pursuant to the provisions of the Pooling and Master Servicing Agreement,
unless such Securityholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may
be incurred therein or thereby;
(v) 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 the
Pooling and Master Servicing Agreement;
(vi) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so by
Holders of Securities entitled to at least 25% of the Voting Rights;
provided, however, that if the payment within a reasonable time to the
Trustee of the
58
costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not assured to the
Trustee by the security afforded to it by the terms of the Pooling and
Master Servicing Agreement, the Trustee may require indemnity against such
expense or liability as a condition to taking any such action. The expense
of every such examination shall be paid by the Master Servicer or, if paid
by the Trustee, shall be repaid by the Master Servicer upon demand;
(vii) The Trustee may execute any of the trusts or powers under the
Pooling and Master Servicing Agreement or perform any duties hereunder
either directly or by or through agents or attorneys and the Trustee shall
not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it under the Pooling and
Master Servicing Agreement;
(viii) Whenever the Trustee is authorized herein to require acts or
documents in addition to those required to be provided it in any matter, it
shall be under no obligation to make any determination whether or not such
additional acts or documents should be required unless obligated to do so
under Section 8.01;
(ix) The permissive right or authority of the Trustee to take any
action enumerated in this Agreement shall not be construed as a duty or
obligation; and
(x) The Trustee shall not be deemed to have notice of any matter,
including without limitation any Event of Default, unless one of its
Officers has actual knowledge thereof or unless written notice thereof is
received by the Trustee at the Corporate Trust Office and such notice
references the applicable Securities generally, the Seller, the Trust or
this Agreement.
(b) All rights of action under the Pooling and Master Servicing Agreement
or under any of the Securities, enforceable by the Trustee, may be enforced by
it without the possession of any of the Securities, or the production thereof at
the trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of such Securities, subject to the provisions of the
Pooling and Master Servicing Agreement.
Section 8.03. Trustee Not Liable for Securities or Mortgage Assets.
The recitals contained in the Pooling and Master Servicing Agreement and in
the Securities (other than the signature and countersignature of the Trustee on
the Securities) shall be taken as the statements of the Company, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations or warranties as to the validity or sufficiency of the Pooling
and Master Servicing Agreement or of the Securities (other than the signature
and countersignature of the Trustee on the Securities) or of any Mortgage Asset
or related document. The Trustee shall not be accountable for the use or
application by the Company of any of the Securities or of the proceeds of such
Securities, or for the use or application of any funds paid to the Company in
respect of the Mortgage Assets or deposited in or withdrawn from the Asset
Proceeds Account or Master Servicer Custodial Account other than any funds held
by or on
59
behalf of the Trustee in accordance with Sections 3.01 and 3.02 or as owner of
the Regular Interests of the Pooling REMIC.
Section 8.04. Trustee May Own Securities.
The Trustee in its individual capacity or any other capacity may become the
owner or pledgee of Securities with the same rights it would have if it were not
Trustee.
Section 8.05. Trustee's Fees and Expenses.
The Master Servicer shall, pursuant to the Pooling and Master Servicing
Agreement or a separate fee agreement, (i) pay to the Trustee reasonable
compensation (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) for all services rendered by
it in the execution of the trusts created under the Pooling and Master Servicing
Agreement and in the exercise and performance of any of the powers and duties
thereunder of the Trustee and (ii) reimburse the Trustee for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of the Pooling and Master Servicing
Agreement (including but not limited to the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith and except any expenses incurred or Advances made by
the Trustee in connection with its assumption of the obligations of the Master
Servicer pursuant to Section 7.02 hereof. The Master Servicer shall indemnify
and hold harmless the Trustee and any director, officer, employee or agent of
the Trustee against any loss, liability or expense thereof, including reasonable
attorney's fees, incurred arising out of or in connection with the Pooling and
Master Servicing Agreement, any custodial agreement or the Securities,
including, but not limited to, any such loss, liability, or expense incurred in
connection with any legal action against the Trust or the Trustee or any
director, officer, employee or agent thereof, or the performance of any of the
Trustee's duties under the Pooling and Master Servicing Agreement other than any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence in the performance of duties under the Pooling and Master
Servicing Agreement or by reason of reckless disregard of obligations and duties
under the Pooling and Master Servicing Agreement. Any payment pursuant to this
Section made by the Master Servicer to the Trustee shall be from such entity's
own funds, without reimbursement therefor. The provisions of this Section 8.05
shall survive the resignation or removal of the Master Servicer or Trustee and
the termination of this Pooling and Master Servicing Agreement.
Section 8.06. Eligibility Requirements for Trustee.
The Trustee shall at all times be a corporation or national banking
association that is not an Affiliate of the Company or the Master Servicer
organized and doing business under the laws of any state or the United States of
America, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and subject to supervision
or examination by federal or state authority. If such corporation publishes
reports of its conditions at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set
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forth in its most recent report of conditions 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 8.07.
Section 8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trusts
created pursuant to a Pooling and Master Servicing Agreement by giving written
notice thereof to the Company, the Master Servicer and to all Securityholders.
Upon receiving such notice of resignation, the Company shall promptly appoint a
successor trustee by written instrument, in duplicate, which instrument shall be
delivered to the resigning Trustee and to the successor trustee. A copy of such
instrument shall be delivered to the Securityholders, the Master Servicer and
each Servicer by the Company. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.06 and shall fail to resign after written request
therefor by the Company, or if any time the Trustee shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee
or of its property shall be appointed, or any public officer shall take charge
or control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Company may remove the
Trustee and appoint a successor trustee by written instrument, in duplicate,
which instrument shall be delivered to the Trustee so removed and to the
successor trustee. A copy of such instrument shall be delivered to the
Securityholders, the Master Servicer and each Servicer by the Company.
The Holders of Securities entitled to at least 51% of the Voting Rights may
at any time remove the Trustee and appoint a successor trustee by written
instrument or instruments, in triplicate, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered to the Company, one complete set to the Trustee so removed and one
complete set to the successor trustee so appointed. A copy of such instrument
shall be delivered to the Securityholders, the Master Servicer and each Servicer
by the Company.
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 8.08 hereof.
Section 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.08 shall execute,
acknowledge and deliver to the Company, the Master Servicer and to the
predecessor trustee an instrument accepting such appointment under the Pooling
and Master Servicing Agreement 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 thereunder, with the
like effect as if originally named as trustee therein. The predecessor trustee
shall deliver to the successor trustee all Trustee Mortgage Asset Files and
related documents and statements held by it under the Pooling
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and Master Servicing Agreement and the Company, 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 8.06 hereof.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Company shall mail notice of the succession of such trustee under
the Pooling and Master Servicing Agreement to all Holders of Securities at their
addresses as shown in the Security Register. If the Company fails to mail such
notice within 10 days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of the
Company.
Section 8.09. 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 succeeding to the business of the Trustee, shall be the successor of
the Trustee under the Pooling and Master Servicing Agreement provided such
corporation shall be eligible under the provisions of Section 8.06, 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 8.10. Appointment of Co-Trustee or Separate Trustee.
For the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust or property securing the same may at the time be
located, the Company, the Master Servicer and the Trustee acting jointly shall
have the power and shall execute and deliver all instruments to appoint one or
more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or trustees, of all or any part of
the Trust, and to vest in such Person or Persons, in such capacity, such title
to the Trust, or any part thereof, and, subject to the other provisions of this
Section 8.10, such powers, duties, obligations, rights and trusts as the
Company, the Master Servicer and the Trustee may consider necessary or
desirable. If the Company or the Master Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, the
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee(s) hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 8.06 hereof and no notice to Holders of
Securities of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 8.08 hereof.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 8.10 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
62
particular act or acts are to be performed (whether as Trustee under the Pooling
and Master Servicing Agreement or as successor to the Master Servicer pursuant
to Section 7.02 hereof), 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 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.
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 the Pooling and Master Servicing
Agreement and the conditions of this Article VIII. 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 the Pooling and Master Servicing Agreement, specifically
including every provision of the Pooling and Master Servicing 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 the
Pooling and Master Servicing 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. Any expense associated with the
appointment of a separate trustee or co-trustee shall not be an expense of the
Master Servicer.
Section 8.11. Appointment of Custodians.
The Trustee may, with the consent of the Master Servicer, appoint one or
more Custodians to hold all or a portion of the Trustee Mortgage Asset Files as
agent for the Trustee, by entering into a custodial agreement. The appointment
of any Custodian may at any time be terminated and a substitute custodian
appointed therefor by the Trustee. The Trustee shall terminate the appointment
of any Custodian and appoint a substitute custodian upon the request of the
Master Servicer to the Trustee. Subject to Article VIII, the Trustee agrees to
comply with the terms of each custodial agreement and to enforce the terms and
provisions thereof against the Custodian for the benefit of the Securityholders.
Each Custodian shall be a depository institution or trust company subject to
supervision by federal or state authority, shall have combined capital and
surplus of at least $10,000,000 and shall be qualified to do business in the
jurisdiction in which it holds any Trustee Mortgage Asset File. Any such
Custodian may not be an affiliate of the Company or any Seller with respect to
the applicable Trust.
Section 8.12. Trustee May Enforce Claims Without Possession of Certificates.
All rights of action and claims under the Pooling and Master Servicing
Agreement or the Securities may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or the production thereof in any
proceeding relating thereto and any such proceeding
63
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, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders in respect of
which such judgment has been recovered.
ARTICLE IX
REDEMPTION OF SECURITIES AND TERMINATION OF TRUST
Section 9.01. Redemption.
Unless otherwise provided in the Pooling and Master Servicing Agreement,
either the Master Servicer or the Holders of the majority of the Percentage
Interest in the Residual Securities may, at their respective options, make or
cause a Person to make a Redeeming Purchase of the Securities for the Redemption
Price on any Distribution Date on or after the earlier of (a) the Distribution
Date on which, after taking into account distributions of principal to be made
on such Distribution Date, the aggregate Security Principal Balance of the
Securities is equal to or less than 10% of the initial aggregate Security
Principal Balance of such Securities, or (b) the Redemption Date. The Holders
of a majority of the Percentage Interests of each Class of Residual Securities
may not cause a Person to make a Redeeming Purchase unless the Master Servicer
shall have first received cash from such Holders in an amount equal to the
Redemption Price. Unclaimed funds otherwise distributable to Securityholders on
a Distribution Date on which a Redeeming Purchase is made are to be deposited in
the Redemption Account.
Section 9.02. Termination.
Whether or not the Securities have been redeemed, unless otherwise provided
in the Pooling and Master Servicing Agreement, either the Master Servicer or the
Holders of the majority of the Percentage Interest in the Residual Securities
(or each such Class, if more than one), may, at their respective options, make
or cause a Person to make a Terminating Purchase for the Termination Price on
any Distribution Date upon which a Redeeming Purchase may be made. Upon such
Terminating Purchase or the final payment or other liquidation (or any advance
with respect thereto) of the last Mortgage Asset remaining in the Trust or the
disposition of the last REO remaining in the Trust, the respective obligations
and responsibilities under the Pooling and Master Servicing Agreement of the
Company, the Master Servicer and the Trustee (other than the obligations of the
Trustee to make payments to Securityholders as hereafter set forth and of the
Master Servicer to make payment to the Trustee of all amounts due to it
hereunder) shall terminate upon payment to the Securityholders of all amounts
held by or on behalf of the Trustee and required hereunder to be so paid and
upon deposit of unclaimed funds otherwise distributable to Securityholders in
the Termination Account. Notwithstanding the foregoing, in no event shall the
Trust created hereby continue beyond the expiration of 21 years from the death
of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. James's, living on the date
hereof.
The Trust also may be terminated and the Securities retired if the Master
Servicer determines, based upon an Opinion of Counsel, that the REMIC status of
any related REMIC has been lost or that a substantial risk exists that such
REMIC status will be lost for the then-current taxable year.
64
Section 9.03. Procedure for Redemption or Termination.
The requisite Residual Securityholders or Master Servicer shall each advise
the Trustee of its election to cause a Redeeming Purchase or Terminating
Purchase no later than the Distribution Date in the month preceding the
Distribution Date on which the Redeeming Purchase or Terminating Purchase will
occur. The Master Servicer shall advise the Trustee of the final payment or
other Liquidation of the last Mortgage Asset remaining in the Trust or the
disposition of the last REO remaining in the Trust at least two Business Days
prior to the Remittance Date in the month in which the Trust will terminate.
Notice of the Distribution Date on which any such redemption or termination
shall occur (the "Final Distribution Date") shall be given promptly by the
Trustee by letter to Securityholders mailed (a) in the event such notice is
given in connection with a Redeeming Purchase or Terminating Purchase, not
earlier than the 15th day and not later than the last day of the month preceding
the month of such final distribution or (b) otherwise during the month of such
final distribution on or before the Remittance Date in such month, in each case
specifying (i) the Final Distribution Date and that final payment of the
Securities will be made upon presentation and surrender of Securities at the
office of the Trustee therein designated on that date, (ii) the amount of any
such final payment and (iii) that the Record Date otherwise applicable to such
Final Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Securities at the office of the Trustee. The
Trustee shall give such notice to the Security Registrar at the time such notice
is given to Securityholders. In the event such notice is given in connection
with a Redeeming Purchase or Terminating Purchase, the purchaser shall deliver
to the Trustee for deposit in the Asset Proceeds Account on the Business Day
immediately preceding the Final Distribution Date an amount in next day funds
equal to the Redemption Price or Termination Price, as the case may be.
Upon presentation and surrender of the Securities on a Distribution Date by
Securityholders, the Trustee shall distribute to Securityholders (A) the amount
otherwise distributable on such Distribution Date, if not in connection with a
Redeeming Purchase or Terminating Purchase, or (B) if in connection with a
Redeeming Purchase or Terminating Purchase, an amount determined as follows:
With respect to each Security with an outstanding Security Principal Balance,
the outstanding Security Principal Balance thereof, plus interest thereon
through the Accounting Date preceding the Distribution Date fixed for redemption
or termination and any previously unpaid interest, net of unrealized losses,
Realized Interest Shortfall and Shortfall with respect thereto; and in addition,
with respect to each Residual Security, the Percentage Interest evidenced
thereby multiplied by the difference between the Redemption Price or Termination
Price and the aggregate amount to be distributed as provided in the first clause
of this sentence and the next succeeding sentence. The Trustee also shall pay
each Servicer, the Master Servicer or itself the amount of their respective
unreimbursed Advances.
Upon the deposit of the Redemption Price in the Asset Proceeds Account, the
Trustee (or the Custodian) shall retain possession of the Mortgage Assets and
shall release the Securities to the person effecting the Redeeming Purchase.
Upon the deposit of the Termination Price in the Asset Proceeds Account, the
Trustee, and any Custodian acting as its agent, shall promptly release to the
purchaser the Trustee Mortgage Asset Files for the remaining Mortgage Assets,
and the Trustee shall execute all assignments, endorsements and other
instruments without
65
recourse necessary to effectuate such transfer. The Trust shall terminate
immediately following the deposit of funds in the Termination Account as
provided below.
In the event that all of the Securityholders shall not surrender their
Securities within six months after the Final Distribution Date specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Securityholders to surrender their Securities and receive the
final distribution with respect thereto, net of the cost of such second notice.
If within one year after the second notice all the Securities 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
Securityholders concerning surrender of their Securities, and the cost thereof
shall be paid out of the amounts otherwise payable on such Securities. Any
funds payable to Securityholders that are not distributed on the Final
Distribution Date shall be deposited in a Redemption Account or Termination
Account, as the case may be, each of which shall be an Eligible Account, to be
held for the benefit of Securityholders not presenting and surrendering their
Securities in the aforesaid manner, and shall be disposed of in accordance with
this Section.
Section 9.04. Additional Termination Requirements.
(a) In the event of a Terminating Purchase as provided in Section 9.02,
the Trust shall be terminated in accordance with the following additional
requirements, unless the Trustee receives (i) a Special Tax Opinion and (ii) a
Special Tax Consent from each of the Holders of the Residual Securities (unless
the Special Tax Opinion specially provides that no REMIC-level tax will result
from the Terminating Purchase):
(A) Within 90 days prior to the Final Distribution Date, the Company
on behalf of the related REMIC shall adopt a plan of complete liquidation
meeting the requirements of a qualified liquidation under the REMIC
Provisions (which plan may be adopted by the Trustee's attachment of a
statement specifying the first day of the 90-day liquidation period to the
REMIC's final federal income tax return);
(B) Upon making final payment on the Regular Securities or the
deposit of any unclaimed funds otherwise distributable to the holders of
the Regular Securities in the Termination Account on the Final Distribution
Date, the Trustee shall distribute or credit, or cause to be distributed or
credited, to the Holders of the Residual Securities all cash on hand
relating to the REMIC after such final payment (other than cash retained to
meet claims), and the REMIC shall terminate at that time; and
(C) In no event may the final payment on the Securities be made after
the 90th day from the date on which the plan of complete liquidation is
adopted. A payment into the Termination Account with respect to any
Security pursuant to Section 9.03 shall be deemed a final payment on, or
final distribution with respect to, such Security for the purposes of this
clause.
(b) By its acceptance of a Residual Security, the Holder thereof hereby
(i) authorizes such action as may be necessary to adopt a plan of complete
liquidation of any related REMIC and (ii) agrees to take such action as may be
necessary to adopt a plan of complete liquidation of
66
any related REMIC upon the written request of the Master Servicer, which
authorization shall be binding upon all successor Holders of Residual
Securities.
ARTICLE X
REMIC TAX PROVISIONS
Section 10.01. REMIC Administration.
(a) Unless otherwise specified in the Pooling and Master Servicing
Agreement, the Trustee shall elect (on behalf of each REMIC to be created) to
have the Trust (or designated assets thereof) treated as one or more REMICs on
Form 1066 or other appropriate federal tax or information return for the taxable
year ending on the last day of the calendar year in which the Securities are
issued as well as on any corresponding state tax or information return necessary
to have the Trust (or such assets) treated as a REMIC under state law.
(b) The Master Servicer shall pay any and all tax related expenses (not
including taxes) of the Trust and each REMIC, including but not limited to any
professional fees or expenses related to (i) audits or any administrative or
judicial proceedings with respect to each REMIC that involve the Internal
Revenue Service or state tax authorities or (ii) the adoption of a plan of
complete liquidation.
(c) The Master Servicer shall prepare any necessary forms for election as
well as all of the Trust's and each REMIC's federal and state tax and
information returns. At the request of the Master Servicer, the Trustee shall
sign and file such returns on behalf of each REMIC. The expenses of preparing
and filing such returns shall be borne by the Master Servicer.
(d) The Master Servicer shall perform all reporting and other tax
compliance duties that are the responsibility of the Trust and each REMIC under
the REMIC Provisions or state or local tax law. Among its other duties, if
required by the REMIC Provisions, the Master Servicer, acting as agent of each
REMIC, shall provide (i) to the Treasury or other governmental authority such
information as is necessary for the application of any tax relating to the
transfer of a Residual Security to any Disqualified Organization and (ii) to the
Trustee such information as is necessary for the Trustee to discharge its
obligations under the REMIC Provisions to report tax information to the
Securityholders.
(e) The Company, the Master Servicer, the Trustee (to the extent it has
been instructed by the Company or the Master Servicer), and the Holders of the
Residual Securities shall take any action or cause any REMIC to take any action
necessary to create or maintain the status of such REMIC as a REMIC under the
REMIC Provisions and shall assist each other as necessary to create or maintain
such status.
(f) The Company, the Master Servicer, the Trustee (to the extent it has
been instructed by the Company or the Master Servicer), and the Holders of the
Residual Securities shall not take any action required by the Code or REMIC
Provisions, or fail to take any action, or cause any REMIC to take any action or
fail to take any action that, if taken or not taken, could endanger the status
of any such REMIC as a REMIC unless the Trustee and the Master Servicer have
received an Opinion of Counsel (at the expense of the party seeking to take or
to fail to take
67
such action) to the effect that the contemplated action or failure to act will
not endanger such status.
(g) Any taxes that are imposed upon the Trust or any REMIC by federal or
state (including local) governmental authorities (other than taxes paid by a
party pursuant to Section 10.02 hereof or as provided in the following sentence)
shall be allocated in the same manner as Realized Losses are allocated. Any
state (or local) taxes imposed upon the Trust or any REMIC that would not have
been imposed on the Trust or such REMIC in the absence of any legal or business
connection between the Trustee and the state (or locality) imposing such taxes
shall be paid by the Trustee, and, notwithstanding anything to the contrary in
these Standard Terms, such taxes shall be deemed to be part of the Trustee's
cost of doing business and shall not be reimbursable to the Trustee.
(h) The Master Servicer or an Affiliate shall acquire a Residual Security
in each REMIC and will act as the Tax Matters Person of each REMIC and perform
various tax administration functions of each REMIC as its agent, as set forth in
this Section. If the Master Servicer or an Affiliate is unable for any reason
to fulfill its duties as Tax Matters Person for a REMIC, the holder of the
largest Percentage Interest of the Residual Securities in such REMIC shall
become the successor Tax Matters Person of such REMIC.
Section 10.02. Prohibited Activities.
Except as otherwise provided in the Pooling and Master Servicing Agreement,
neither the Company, the Master Servicer, the Holders of the Residual
Securities, nor the Trustee shall engage in, nor shall the Trustee permit, any
of the following transactions or activities unless it has received (a) a Special
Tax Opinion and (b) a Special Tax Consent from each of the Holders of the
Residual Securities (unless the Special Tax Opinion specially provides that no
REMIC-level tax will result from the transaction or activity in question):
(i) the sale or other disposition of, or substitution for, any of
the Mortgage Assets except pursuant to (A) a foreclosure or default with
respect to such Mortgage Assets, (B) the bankruptcy or insolvency of any
REMIC, (C) the termination of any REMIC pursuant to Section 9.02, or (D) a
substitution or purchase in accordance with Section 2.03;
(ii) the acquisition of any Mortgage Assets for the Trust after the
Closing Date except (A) during the three-month period beginning on the
Closing Date pursuant to a fixed price contract in effect on the Closing
Date that has been reviewed and approved by tax counsel acceptable to the
Master Servicer or (B) a substitution in accordance with Section 2.03;
(iii) the sale or other disposition of any investment in the Asset
Proceeds Account at a gain;
(iv) the sale or other disposition of any asset held in a Reserve
Fund for a period of less than three months (a "Short-Term Reserve Fund
Investment") if such sale or disposition would cause 30% or more of a
REMIC's income from such Reserve Fund
68
for the taxable year to consist of a gain from the sale or disposition of
Short-Term Reserve Fund Investments;
(v) the withdrawal of any amounts from any Reserve Fund except (A)
for the distribution pro rata to the Holders of the Residual Securities or
(B) to provide for the payment of Trust expenses or amounts payable on the
Securities in the event of defaults or late payments on the Mortgage Assets
or lower than expected returns on funds held in the Asset Proceeds Account,
as provided under section 860G(a)(7) of the Code;
(vi) the acceptance of any contribution to the Trust except the
following cash contributions: (A) a contribution received during the three
month period beginning on the Closing Date, (B) a contribution to a Reserve
Fund owned by a REMIC that is made pro rata by the Holders of the Residual
Securities, (C) a contribution to facilitate a Terminating Purchase that is
made within the 90-day period beginning on the date on which a plan of
complete liquidation is adopted pursuant to Section 9.04(a)(A), or (D) any
other contribution approved by the Master Servicer after consultation with
tax counsel; or
(vii) any other transaction or activity that is not contemplated by
the Pooling and Master Servicing Agreement.
Any party causing the Trust to engage in any of the activities prohibited
in this Section shall be liable for the payment of any tax imposed on the Trust
pursuant to Code section 860F(a)(1) or 860G(d) as a result of the Trust engaging
in such activities.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment of Pooling and Master Servicing Agreement.
The Pooling and Master Servicing Agreement may be amended or supplemented
from time to time by the Company, the Master Servicer and the Trustee without
the consent of any of the Securityholders to (a) cure any ambiguity, (b) correct
or supplement any provisions herein which may be inconsistent with any other
provisions herein, (c) modify, eliminate or add to any of its provisions to such
extent as shall be necessary or appropriate to maintain the qualification of the
Trust (or certain assets thereof) either as a REMIC or as a grantor trust, as
applicable under the Code at all times that any Securities are outstanding or
(d) make any other provisions with respect to matters or questions arising under
the Pooling and Master Servicing Agreement or matters arising with respect to
the Trust which are not covered by the Pooling and Master Servicing Agreement
which shall not be inconsistent with the provisions of the Pooling and Master
Servicing Agreement, provided that such action shall not adversely affect in any
material respect the interests of any Securityholder. Any such amendment or
supplement shall be deemed not to adversely affect in any material respect any
Securityholder if there is delivered to the Trustee written notification from
each Rating Agency that rated the applicable Securities to the effect that such
amendment or supplement will not cause that Rating Agency to reduce the then
current rating assigned to such Securities.
69
The Pooling and Master Servicing Agreement may also be amended from time to
time by the Company, the Master Servicer and the Trustee with the consent of the
Holders of Securities entitled to at least 66% of the Voting Rights for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Pooling and Master Servicing Agreement or of modifying
in any manner the rights of the Holders of Securities; provided, however, that
no such amendment shall (A) reduce in any manner the amount of, or delay the
timing of, payments received on Mortgage Assets which are required to be
distributed on any Security without the consent of the Holder of such Security,
(B) adversely affect in any material respect the interests of the Holders of any
Class of Securities in a manner other than as described in (A), without the
consent of the Holders of Securities of such Class evidencing at least 66% of
the Voting Rights of such Class, or (C) reduce the aforesaid percentage of
Securities the Holders of which are required to consent to any such amendment,
without the consent of such Holders of all Securities then outstanding. For
purposes of the giving or withholding of consents pursuant to this Section
11.01, Securities registered in the name of the Company or an Affiliate shall be
entitled to Voting Rights with respect to matters affecting such Securities.
Promptly after the execution of any such amendment the Trustee shall
furnish a copy of such amendment to each Securityholder.
It shall not be necessary for the consent of Securityholders under this
Section 11.01 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 Securityholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Section 11.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, the Pooling and Master Servicing
Agreement is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the properties subject to the Security Instruments are situated,
and in any other appropriate public recording office or elsewhere, such
recordation to be effected by the Master Servicer and at its expense, but only
upon direction of the Trustee accompanied by an Opinion of Counsel (which shall
not be an expense of the Master Servicer or the Trustee) to the effect that such
recordation materially and beneficially affects the interests of the
Securityholders.
For the purpose of facilitating the recordation of the Pooling and Master
Servicing Agreement as herein provided and for other purposes, the Pooling and
Master Servicing Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
Section 11.03. Limitation on Rights of Securityholders.
The death or incapacity of any Securityholder shall not operate to
terminate the Pooling and Master Servicing Agreement or the Trust, nor entitle
such Securityholder's legal representatives or heirs to claim an accounting or
to take any action or proceeding in any court
70
for a partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
No Securityholder 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, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Securities, be
construed so as to constitute the Securityholders from time to time as partners
or members of an association; nor shall any Securityholder be under any
liability to any third person by reason of any action taken by the parties to
the Pooling and Master Servicing Agreement pursuant to any provision hereof.
No Securityholder shall have any right by virtue of any provision of the
Pooling and Master Servicing Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to the Pooling and
Master Servicing Agreement, unless such Holder previously shall have given to
the Trustee a written notice of default and of the continuance thereof, as
hereinbefore provided, and unless also the Holders of Securities entitled to at
least 25% of the Voting Rights shall have made written request upon the Trustee
to institute such action, suit or proceeding in its own name as Trustee under
the Pooling and Master Servicing Agreement and shall have offered to the Trustee
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Securityholder with
every other Securityholder and the Trustee, that no one or more Holders of
Securities shall have any right in any manner whatever by virtue of any
provision of the Pooling and Master Servicing Agreement to affect, disturb or
prejudice the rights of the Holders of any other of such Securities, or to
obtain or seek to obtain priority over or preference to any other such Holder,
or to enforce any right under the Pooling and Master Servicing Agreement, except
in the manner therein provided and for the equal, ratable and common benefit of
all Securityholders. For the protection and enforcement of the provisions of
this Section, each and every Securityholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
Section 11.04. Notices.
All demands and notices under the Pooling and Master Servicing Agreement
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service, to (a) in the case of the Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Tower, Fifty
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, telecopy (▇▇▇) ▇▇▇-▇▇▇▇ or such other address or telecopy number as may
hereafter be furnished to each party to the Pooling and Master Servicing
Agreement in writing by the Company, (b) in the case of the Master Servicer,
such address or telecopy number as may hereafter be furnished to each party to
the Pooling and Master Servicing Agreement in writing by the Master Servicer and
(c) in the case of the Trustee, at its address and telecopy number set forth in
the Pooling and Master Servicing Agreement, or such other address or telecopy
number as may hereafter be furnished to each party to the Pooling and Master
Servicing Agreement in writing by the Trustee. Any notice required or permitted
to be mailed to a Securityholder shall be given by first-class mail, postage
prepaid, or by express delivery service, at the address of
71
such Holder as shown in the Security Register. Any notice so mailed within the
time prescribed in the Pooling and Master Servicing Agreement shall be
conclusively presumed to have been duly given, whether or not the Securityholder
receives such notice. A copy of any notice required to be telecopied hereunder
also shall be mailed to the appropriate party in the manner set forth above. A
copy of any notice given hereunder to any other party shall be delivered to the
Trustee.
Section 11.05. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of the
Pooling and Master Servicing Agreement shall be for any reason whatsoever held
invalid, then such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of the
Pooling and Master Servicing Agreement and shall in no way affect the validity
or enforceability of the other provisions of the Pooling and Master Servicing
Agreement or of the Securities or the rights of the Holders thereof.
Section 11.06. Sale of Mortgage Assets.
It is the express intent of the Company and the Trustee that the conveyance
of the Mortgage Assets by the Company to the Trustee pursuant to each Pooling
and Master Servicing Agreement be construed as a sale of the Mortgage Assets by
the Company to the Trustee. It is, further, not the intention of the Company
and the Trustee that such conveyance be deemed a pledge of the Mortgage Assets
by the Company to the Trustee to secure a debt or other obligation of the
Company. However, in the event that, notwithstanding the intent of the parties,
the Mortgage Assets are held to continue to be property of the Company then (a)
the Pooling and Master Servicing Agreement also shall be deemed to be a security
agreement within the meaning of Article 9 of the UCC; (b) the conveyance by the
Company provided for in the Pooling and Master Servicing Agreement shall be
deemed to be a grant by the Company to the Trustee of a security interest in all
of the Company's right, title and interest in and to the Mortgage Assets and all
amounts payable to the holders of the Mortgage Assets in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time held or invested in the Master Servicer Custodial Account or Asset Proceeds
Account, whether in the form of cash, instruments, securities or other property;
(c) the possession by the Trustee or its agent of Notes and such other items of
property as constitute instruments, money, negotiable documents or chattel paper
shall be deemed to be "possession by the secured party" for purposes of
perfecting the security interest pursuant to Section 9-305 of the UCC; 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 the
Trustee shall, to the extent consistent with the Pooling and Master Servicing
Agreement, take such actions as may be necessary to ensure that, if the Pooling
and Master Servicing Agreement were deemed to create a security interest in the
Mortgage Assets, 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 Pooling and Master Servicing Agreement.
72
Section 11.07. Notice to Rating Agency.
(a) The Trustee shall use its best efforts promptly to provide notice to
the Rating Agency with respect to each of the following of which it has actual
knowledge:
(i) any material change or amendment to the Pooling and Master
Servicing Agreement or any agreement assigned to the Trust;
(ii) the occurrence of any Event of Default involving the Master
Servicer that has not been cured or any recommendation by the Master
Servicer that a Servicing Agreement with a Servicer be terminated;
(iii) the resignation, termination or merger of the Company, the
Master Servicer, the Trustee or any Servicer;
(iv) the purchase or substitution of Mortgage Assets pursuant to
Section 2.03;
(v) the final payment to Securityholders;
(vi) any change in the location of any Master Servicer Custodial
Account, Reserve Fund or Asset Proceeds Account;
(vii) any event that would result in the inability of the Servicer
or the Master Servicer to make Advances regarding delinquent Mortgage
Assets or the inability of the Trustee to make any such Advance in the
event it is serving as the Master Servicer pursuant to Section 7.02 hereof;
(viii) any change in applicable law that would require an Assignment
of a Security Instrument, not previously recorded pursuant to Section 2.01,
to be recorded in order to protect the right, title and interest of the
Trustee in and to the related Mortgage Asset or, in case a court should
recharacterize the sale of the Mortgage Assets as a financing, to perfect a
first priority security interest in favor of the Trustee in the related
Mortgage Asset.
(b) The Master Servicer shall promptly notify the Trustee of any of the
events listed in Section 11.07(a) of which it has actual knowledge. In
addition, the Trustee shall promptly furnish to the Rating Agency at its address
set forth in the Pooling and Master Servicing Agreement copies of the following:
(i) each report to Securityholders described in Section 4.01; and
(ii) each Annual Compliance Statement.
(c) Any notice pursuant to this Section 11.07 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 to each Rating
Agency at the address specified in the Pooling and Master Servicing Agreement.
73
Exhibit A-1
FORM OF INITIAL CERTIFICATION
[Date]
Southpoint Residential Mortgage Securities Corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇ Tower,
Fifty Front Street, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[Master Servicer]
[Address]
[Address]
Attention: Master Servicing Department
Pooling and Master Servicing Agreement, dated as of _________ 1, _____, among
Southpoint Residential Mortgage Securities Corporation
[ ], as Master Servicer, and _______________, as Trustee,
Pass-Through Certificates, Series __-__ Trust.
Ladies and Gentlemen:
In accordance with Section 2.02 of the Standard Terms to the above-
referenced Pooling and Master Servicing Agreement and subject to the further
examination, the Trustee hereby certifies that, except as noted on the Schedule
of Exceptions attached hereto, it, or a Custodian on its behalf, has received a
Trustee Mortgage Asset File that contains a Note corresponding to such Trustee
Mortgage Asset File with respect to each Mortgage Asset listed on the Mortgage
Asset Schedule.
The Trustee further certifies as to each Note that:
(1) except for the endorsement required pursuant to clause (a) of the
definition of Trustee Mortgage Asset File, the Note, on the face or the reverse
side(s) thereof, does not contain evidence of any unsatisfied claims, liens,
security interests, encumbrances or restrictions on transfer; and
(2) the Note bears an endorsement (which appears to be an original) in
blank or to the Trustee, as set forth in clause (b)(ii) of Section 2.02 of the
Standard Terms.
Except as described herein, neither the Trustee, nor any Custodian on its
behalf, has made an independent examination of any documents contained in any
Trustee Mortgage Asset File. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in any Trustee Mortgage Asset File for any of
Exhibit A-1-1
the Mortgage Assets listed on the Mortgage Asset Schedule to the Pooling and
Master Servicing Agreement, (ii) the collectibility, insurability, effectiveness
or suitability of any such Mortgage Asset or (iii) whether any Trustee Mortgage
Asset File should include any assumption agreement, modification agreement,
written assurance or substitution agreement.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Master Servicing
Agreement.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be executed
by a duly authorized Officer this __ day of __________, ____.
[TRUSTEE],
as Trustee
By:___________________________
Its:__________________________
Exhibit ▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF INTERIM CERTIFICATION
[Date]
Southpoint Residential Mortgage Securities Corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇ Tower,
Fifty Front Street, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[Master Servicer]
[Address]
[Address]
Attention: Master Servicing Department
Pooling and Master Servicing Agreement, dated as of _________ 1, _____, among
Southpoint Residential Mortgage Securities Corporation
[ ], as Master Servicer, and
____________________, as Trustee,
Pass-Through Certificates, Series __-__ Trust.
Ladies and Gentlemen:
In accordance with Section 2.02 of the Standard Terms to the above-
referenced Pooling and Master Servicing Agreement, the undersigned, as Trustee,
hereby certifies that, as to each Mortgage Asset listed on the Mortgage Asset
Schedule to the Pooling and Master Servicing Agreement (other than any Mortgage
Asset paid in full or listed on the attachment hereto) it, or a Custodian on its
behalf, has reviewed the Trustee Mortgage Asset File and has determined that,
except as noted on the Schedule of Exceptions attached hereto: (i) all documents
required to be included in the Trustee Mortgage Asset File (as set forth in
Section 2.01 of the Standard Terms) are in its possession or in the possession
of a Custodian on its behalf; (ii) such documents have been reviewed by it, or
such Custodian on its behalf, and appear regular on their face and relate to
such Mortgage Asset; and (iii) based on examination by it, or by a Custodian on
its behalf, and only as to such documents, the information set forth on the
Mortgage Asset Schedule to the Pooling and Master Servicing Agreement accurately
reflects the information set forth in the Trustee Mortgage Asset File. The
undersigned further certifies that the Trustee's review, or the review of its
Custodian, of each Trustee Mortgage Asset File included each of the procedures
listed in clause (c) of Section 2.02 of the Standard Terms.
Except as described herein, neither the Trustee, nor any Custodian on its
behalf, has made an independent examination of any documents contained in any
Trustee Mortgage Asset File. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any
documents contained in any Trustee Mortgage Asset File for any of the
Exhibit A-2-1
Mortgage Assets listed on the Mortgage Asset Schedule to the Pooling and Master
Servicing Agreement, (ii) the collectibility, insurability, effectiveness or
suitability of any such Mortgage Asset or (iii) whether any Trustee Mortgage
Asset File should include any assumption agreement, modification agreement,
written assurance or substitution agreement.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Master Servicing
Agreement.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be executed
by a duly authorized Officer this __ day of __________, ____.
[TRUSTEE]
By:___________________________
Its:__________________________
Exhibit ▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF FINAL CERTIFICATION
[Date]
Southpoint Residential Mortgage Securities Corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇ Tower
Fifty Front Street, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[Master Servicer]
[Address]
[Address]
Attention: Master Servicing Department
Pooling and Master Servicing Agreement, dated as of _________ 1, ____, among
Southpoint Residential Mortgage Securities Corporation
[ ], as Master Servicer, and _______________, as Trustee,
Pass-Through Certificates, Series __-__ Trust.
Ladies and Gentlemen:
In accordance with Section 2.02 of the Standard Terms to the above-
referenced Pooling and Master Servicing Agreement, the undersigned, as Trustee,
hereby certifies that, except as noted on the Schedule of Exceptions attached
hereto, for each Mortgage Asset listed on the Mortgage Asset Schedule (other
than any Mortgage Asset paid in full or listed on the attachment hereto) it, or
a Custodian on its behalf, has received a complete Trustee Mortgage Asset File
which includes each of the documents required to be included in the Trustee
Mortgage Asset File.
Neither the Trustee nor any Custodian on its behalf has made an independent
examination of any documents contained in any Trustee Mortgage Asset File beyond
the review specifically required in the above referenced Pooling and Master
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in any Trustee Mortgage Asset File for any of the Mortgage
Assets listed on the Mortgage Asset Schedule, (ii) the collectibility,
insurability, effectiveness or suitability of any such Mortgage Asset or (iii)
whether any Trustee Mortgage Asset File should include any assumption agreement,
modification agreement, written assurance or substitution agreement.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Master Servicing
Agreement.
Exhibit A-3-1
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be executed
by a duly authorized Officer this __ day of __________, ____.
[TRUSTEE]
By:___________________________
Its:__________________________
Exhibit A-3-2
Exhibit B
FORM OF RECORDATION REPORT
[Date]
[Master Servicer]
[Address]
[Address]
Attention: Master Servicing Department
Re: Pooling and Master Servicing Agreement, dated as of _________ 1,
____,
among Southpoint Residential Mortgage Securities Corporation
[ ], as Master Servicer,
and _______________, as Trustee, Pass-Through
Certificates, Series __-__ Trust.
Ladies and Gentlemen:
In accordance with Section 2.02(f) of the Standard Terms, the undersigned,
as Trustee hereby notifies you, that as of the date hereof with respect to the
following Mortgage Assets it has not received the indicated documents.
If a Security Instrument for any Mortgage Asset has not been recorded and
the original recorded Security Instrument or a copy of such recorded Security
Instrument with such evidence of recordation certified to be true and correct by
the appropriate governmental recording office has not been delivered to the
Trustee (or Custodian), the Seller or Servicer may be required to purchase such
Mortgage Asset from the Trustee if such defect materially and adversely affects
the value of the Mortgage Asset or the interest of the Trust therein.
If an Assignment to the Trustee of the Seller's interest in a Security
Instrument has not been recorded within one year of the Closing Date, the Seller
or Servicer shall be required to (i) purchase the related Mortgage Asset from
the Trustee or (ii) if there have been no defaults in the Monthly Payments on
such Mortgage Asset, deposit an amount equal to the Purchase Price into an
escrow account maintained by the Trustee.
Original Recorded
Company Loan Original Recorded Security Assignment of Security
Number Instrument Instrument
------
or Certified Copy Thereof or Certified Copy Thereof*
-------------------------- --------------------------
___________________
* As required with regard to any intervening Assignments.
Exhibit B-1
[TRUSTEE]
as Trustee
By:___________________________
Its:__________________________
Exhibit B-2
Exhibit C
FORM OF REMITTANCE REPORT
Southpoint Residential Mortgage Securities Corporation
Trust: ____________________________________________________
Distribution Date: ______________________________________
Reporting Month: ________________________________________
The following class, series and collateral information will be included on
each Remittance Report, as appropriate:
Class Level Series Level Collateral Level
----------- ------------ ----------------
Class Name Asset Proceeds Account - Scheduled Principal
Pass-Through Rate Deposits and Withdrawals Unscheduled Principal
Beginning Balance Balance Information for Scheduled Interest
Interest Distribution Other Accounts Beginning Asset Count
Principal Distribution Advances on Delinquencies Ending Asset Count
Realized Losses Beginning Balance Weighted Average Maturity
Ending Balance Interest Distribution (WAM)
Total Distribution Principal Distribution Weighted Average Note Rate
Aggregate Realized Losses Realized Losses Weighted Average Net Rate
Original Balance Ending Balance Weighted Average Pass-
Record Date Total Distribution Through Rate
Interest Distribution Factor Aggregate Realized Losses Delinquency Statistics - 30,
Principal Distribution Factor Original Balance 60, and 90 day
Remaining Principal Factor Remaining Principal Factor delinquencies;
Scheduled Principal Scheduled Principal foreclosures and REO's
Unscheduled Principal Unscheduled Principal
Current Interest Current Interest
Recovery/(Shortfall) Recovery/(Shortfall)
Accretion Accretion
Exhibit C-1
Exhibit D
FORM OF RULE 144A AGREEMENT--QIB CERTIFICATION
SOUTHPOINT RESIDENTIAL MORTGAGE SECURITIES CORPORATION
PASS-THROUGH CERTIFICATES, SERIES ___-__, CLASS ___
________________
(DATE)
Southpoint Residential Mortgage Securities Corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇ Tower
Fifty Front Street, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[Master Servicer]
[Address]
[Address]
Attn: Master Servicing Department
Ladies and Gentlemen:
In connection with the purchase on the date hereof of the captioned
securities (the "Purchased Securities"), the undersigned (the "Transferee")
hereby certifies and covenants to the transferor, the Company, the Master
Servicer, the Trustee and the Trust as follows:
1. The Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933,
as amended (the "1933 Act") and has completed the form of certification to that
effect attached hereto as Annex A1 (if the Transferee is not a registered
--------
investment company) or Annex A2 (if the Transferee is a registered investment
--------
company). The Transferee is aware that the sale to it is being made in reliance
on Rule 144A.
2. The Transferee understands that the Purchased Securities have not been
registered under the 1933 Act or registered or qualified under any state
securities laws and that no transfer may be made unless the Purchased Securities
are registered under the 1933 Act and under applicable state law or unless an
exemption from such registration is available. The Transferee further
understands that neither the Company, the Master Servicer, the Trustee nor the
Trust is under any obligation to register the Purchased Securities or make an
exemption from such registration available.
3. The Transferee is acquiring the Purchased Securities for its own
account or for the account of a "qualified institutional buyer," and understands
that such Purchased Securities may be resold, pledged or transferred only (a) to
a person reasonably believed to be such a qualified institutional buyer that
purchases for its own account or for the account of a qualified
Exhibit D-1
institutional buyer to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, or (b) pursuant to another exemption
from registration under the 1933 Act and under applicable state securities laws.
In addition, such transfer may be subject to additional restrictions, as set
forth in Section 5.05 of the Standard Terms to the Pooling and Master Servicing
Agreement.
4. The Transferee has been furnished with all information that it
requested regarding (a) the Purchased Securities and distributions thereon and
(b) the Pooling and Master Servicing Agreement referred to below.
5. If applicable, the Transferee has complied or will comply in all
material respects with applicable regulatory guidelines relating to the
ownership of mortgage derivative products.
All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Master Servicing
Agreement, dated as of _____________ 1, ____, which incorporates by reference
the Standard Terms thereto, among Southpoint Residential Mortgage Securities
Corporation, the Master Servicer and the Trustee, pursuant to which the
Purchased Securities were issued.
IN WITNESS WHEREOF, the undersigned has caused this Rule 144A Agreement--
QIB Certification to be executed by its duly authorized representative as of the
day and year first above written.
[TRANSFEREE]
By: ____________________________________
Name: ____________________________________
Title: __________________________________
Exhibit D-2
Annex A1 to Exhibit D
TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES
------------------------------------------------------
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Transferee.
2. The Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933,
as amended (the "1933 Act"), because (a) the Transferee owns and/or invests on a
discretionary basis at least $100,000,000 in securities or, if the Transferee is
a dealer, the Transferee owns and/or invests on a discretionary basis at least
$10,000,000 in securities. The Transferee owned and/or invested on a
discretionary basis at least $____________ in securities (except for the
excluded securities referred to in paragraph 3 below) as of _______________
[specify a date on or since the end of the Transferee's most recently ended
fiscal year] (such amount being calculated in accordance with Rule 144A) and (b)
the Transferee meets the criteria listed in the category marked below.
____ Corporation, etc. The Transferee is an organization described in
----------------
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, a
corporation (other than a bank as defined in Section 3(a)(2) of the
1933 Act or a savings and loan association or other similar
institution referenced in Section 3(a)(5)(A) of the Act), a
partnership, or a Massachusetts or similar business trust.
____ Bank. The Transferee (a) is a national bank or banking institution as
----
defined in Section 3(a)(2) of the 1933 Act and is organized under the
laws of a state, territory or the District of Columbia. The business
of the Transferee is substantially confined to banking and is
supervised by the appropriate 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 as of a date
not more than 16 months preceding the date of this certification in
the case of a U.S. bank, and not more than 18 months preceding the
date of this certification in the case of a foreign bank or equivalent
institution, a copy of which financial statements is attached hereto.
-------------------------------------------------------
____ Savings and Loan. The Transferee is a savings and loan association,
----------------
building and loan association, cooperative bank, homestead association
or similar institution referenced in Section 3(a)(5)(A) of the 1933
Act. The Transferee is supervised and examined by a state or federal
authority having supervisory authority over any such institutions or
is a foreign savings and loan association or equivalent institution
and has an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements as of a date not more than
16 months preceding the date of this certification in the case of a
U.S. savings and loan association or similar institution, and not more
than 18 months preceding the date of this certification in the case of
a foreign savings and loan association or equivalent institution, a
-
copy of which financial statements is attached hereto.
-----------------------------------------------------
Exhibit D-3
____ Broker-dealer. The Transferee is a dealer registered pursuant to
-------------
Section 15 of the Securities Exchange Act of 1934, as amended (the
"1934 Act").
____ Insurance Company. The Transferee is an insurance company as defined
-----------------
in Section 2(13) of the 1933 Act, 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 commissioner or a similar official or
agency of a state, territory or the District of Columbia.
____ State or Local Plan. The Transferee is a plan established and
-------------------
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the
benefit of its employees.
____ ERISA Plan. The Transferee is an employee benefit plan within the
----------
meaning of Title I of the Employee Retirement Income Security Act of
1974, as amended.
____ Investment Adviser. The Transferee is an investment adviser
------------------
registered under the Investment Advisers Act of 1940, as amended.
____ Other. The Transferee qualifies as a "qualified institutional buyer"
-----
as defined in Rule 144A on the basis of facts other than those listed
in any of the entries above. If this response is marked, the
Transferee must certify on additional pages, to be attached to this
certification, to facts that satisfy the Servicer that the Transferee
is a "qualified institutional buyer" as defined in Rule 144A.
3. The term "securities" as used herein does not include (a) securities
---------- ----------------
of issuers that are affiliated with the Transferee, (b) securities constituting
the whole or part of an unsold allotment to or subscription by the Transferee,
if the Transferee is a dealer, (c) bank deposit notes and certificates of
deposit, (d) loan participations, (e) repurchase agreements, (f) securities
owned but subject to a repurchase agreement and (g) 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 Transferee, the Transferee used
the cost of such securities to the Transferee and did not include any of the
securities referred to in the preceding paragraph. Further, in determining such
aggregate amount, the Transferee may have included securities owned by
subsidiaries of the Transferee, but only if such subsidiaries are consolidated
with the Transferee in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Transferee's direction. However, such
securities were not included if the Transferee is a majority-owned, consolidated
subsidiary of another enterprise and the Transferee is not itself a reporting
company under the 1934 Act.
5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor and other parties related to the Purchased
Securities are relying and will continue to rely on the statements made herein
because one or more sales to the Transferee may be made in reliance on Rule
144A.
Exhibit D-4
6. Will the Transferee be purchasing _____ ______
the Purchased Certificates only YES NO
for the Transferee's own account?
If the answer to the foregoing question is "NO", the Transferee agrees
that, in connection with any purchase of securities sold to the Transferee for
the account of a third party (including any separate account) in reliance on
Rule 144A, the Transferee 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 Transferee agrees that the Transferee will not purchase
securities for a third party unless the Transferee 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 Transferee 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 Transferee's purchase of the Purchased
Securities will constitute a reaffirmation of this certification as of the date
of such purchase. In addition, if the Transferee is a bank or savings and loan
as provided above, the Transferee agrees that it will furnish to such parties
updated annual financial statements promptly after they become available.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed by its duly authorized representative this ____ day of ___________,
_____.
_____________________________
Print Name of Transferee
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
Date: ___________________________________
Southpoint Residential Mortgage Securities
Corporation
Pass-Through Certificates,
Series ____-__, Class ____.
Exhibit D-5
Annex A2 to Exhibit D
TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES
----------------------------------------------------
1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the entity purchasing the Purchased
Securities (the "Transferee") or, if the Transferee is part of a Family of
Investment Companies (as defined in paragraph 3 below), is an officer of the
related investment adviser (the "Adviser").
2. The Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933,
as amended (the "1933 Act"), because (a) the Transferee is an investment company
(a "Registered Investment Company") registered under the Investment Company Act
of 1940, as amended (the "1940 Act") and (b) as marked below, the Transferee
alone, or the Transferee's Family of Investment Companies, owned at least
$100,000,000 in securities (other than the excluded securities referred to in
paragraph 4 below) as of ________________ [specify a date on or since the end of
the Transferee's most recently ended fiscal year]. For purposes of determining
the amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities to the Transferee or the
Transferee's Family of Investment Companies was used.
____ The Transferee owned $____________ in securities (other than the
excluded securities referred to in paragraph 4 below) as of the end of
the Transferee's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
____ The Transferee is part of a Family of Investment Companies which owned
in the aggregate $____________ in securities (other than the excluded
securities referred to in paragraph 4 below) as of the end of the
Transferee'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 except for a unit investment trust whose
assets consist solely of shares of one or more Registered Investment Companies
(provided that each series of a "series company," as defined in Rule 18f-2 under
the 1940 Act, shall be deemed to be a separate investment company) that have the
same investment adviser (or, in the case of a unit investment trust, the same
depositor) or investment advisers (or depositors) 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 (a) securities
----------
of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (b) bank deposit notes and
certificates of deposit, (c) loan participations, (d) repurchase agreements, (e)
securities owned but subject to a repurchase agreement and (f) currency,
interest rate and commodity swaps.
Exhibit D-6
5. The Transferee is familiar with Rule 144A and understands that the
parties to which this certification is being made are relying and will continue
to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.
6. The undersigned will notify the parties to which this certification is
made of any changes in the information and conclusions herein. Until such
notice, the Transferee's purchase of the Purchased Securities will constitute a
reaffirmation of this certification by the undersigned as of the date of such
purchase.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed by its duly authorized representative this ____ of ____________, _____.
__________________________________________
Print Name of Transferee or
Adviser
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Southpoint Residential Mortgage Securities
Corporation
Pass-Through Certificates,
Series ___-___, Class ____.
IF AN ADVISER:
________________________________________
Print Name of Transferee
Date:___________________________________
Exhibit D-7
Exhibit E
FORM OF TRANSFEREE AGREEMENT
SOUTHPOINT RESIDENTIAL MORTGAGE SECURITIES CORPORATION
PASS-THROUGH CERTIFICATES, SERIES ___-_, CLASS ___
________________
(DATE)
Southpoint Residential Mortgage Securities Corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇ Tower
Fifty Front Street, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[Master Servicer]
[Address]
[Address]
Attn: Master Servicing Department
Ladies and Gentlemen:
In connection with the purchase on the date hereof of the captioned
securities (the "Purchased Securities"), the undersigned (the "Transferee")
hereby certifies and covenants to the transferor, the Company, the Master
Servicer, the Trustee and the Trust as follows:
1. Representations and Warranties. The Transferee represents and
------------------------------
warrants:
(a) The Transferee is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which the Transferee is
organized, is authorized to invest in the Purchased Securities and to enter into
this Agreement, and has duly executed and delivered this Agreement.
(b) The Transferee is acquiring the Purchased Securities for its own
account as principal and not with a view to the distribution of the Purchased
Securities, in whole or in part, in violation of Section 5 of the Securities Act
of 1933, as amended (the "Act").
(c) The Transferee is an "Accredited Investor" as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Act.
(d) The Transferee has knowledge in financial and business matters
and is capable of evaluating the merits and risks of an investment in the
Purchased Securities; the Transferee has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision;
and the Transferee is able to bear the economic risk of an investment in the
Purchased Securities and can afford a complete loss of such investment;
Exhibit E-1
(e) The Transferee confirms that the Company has made available to
the Transferee the opportunity to ask questions of, and receive answers from,
the Company concerning the Company, the Trust, the purchase by the Transferee of
the Purchased Securities and all matters relating thereto, and to obtain
additional information relating thereto that the Company possesses or can
acquire without unreasonable effort or expense.
2. Covenants. The Transferee covenants:
---------
(a) The Transferee will not make a public offering of the Purchased
Securities, and will not reoffer or resell the Purchased Securities in a manner
that would render the issuance and sale of the Purchased Securities, whether
considered together with the resale or otherwise, a violation of the Act, or any
state securities or "Blue Sky" laws or require registration pursuant thereto;
(b) The Transferee agrees that, in its capacity as holder of the
Purchased Securities, it will assert no claim or interest in the Mortgage Assets
by reason of owning the Purchased Securities other than with respect to amounts
that may be properly and actually payable to the Transferee pursuant to the
terms of the Pooling and Master Servicing Agreement and the securities; and
(c) If applicable, the Transferee will comply in all material
respects with respect to the Purchased Securities with applicable regulatory
guidelines relating to the ownership of mortgage derivative products.
3. Transfer Restrictions.
---------------------
(a) The Transferee understands that the Purchased Securities have not
been registered under the Act or registered or qualified under any state
securities laws and that no transfer may be made unless the Purchased Securities
are registered under the Act and under applicable state law or unless an
exemption from such registration is available. If so requested by the Master
Servicer or the Trustee, the Transferee and the transferor shall certify to the
Company, the Master Servicer and the Trustee as to the factual basis for the
registration or qualification exemption relied upon. The Transferee further
understands that neither the Company, the Master Servicer, the Trustee nor the
Trust is under any obligation to register the Purchased Securities or make an
exemption from such registration available.
(b) In the event that the transfer is to be made within three years
of the date the Purchased Securities were acquired by a non-Affiliate of the
Company from the Company or an Affiliate of the Company, the Master Servicer or
the Trustee may require an Opinion of Counsel (which shall not be an expense of
the Company, the Master Servicer or the Trustee) that such transfer is not
required to be registered under the Act or state securities laws.
(c) Any Securityholder desiring to effect a transfer shall, and does
hereby agree to, indemnify the Company, the Master Servicer and the Trustee
against any liability that may result if the transfer is not exempt under
federal or applicable state securities laws.
(d) The transfer of the Securities may be subject to additional
restrictions, as set forth in Section 5.05 of the Standard Terms of the Pooling
and Master Servicing Agreement.
Exhibit E-2
All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Master Servicing
Agreement, dated as of _____________ 1, ___, which incorporates by reference the
Standard Terms thereto, among Southpoint Residential Mortgage Securities
Corporation, the Master Servicer and the Trustee, pursuant to which the
Purchased Securities were issued.
IN WITNESS WHEREOF, the undersigned has caused this Transferee Agreement to
be executed by its duly authorized representative as of the day and year first
above written.
[TRANSFEREE]
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
Exhibit E-3
Exhibit F
FORM OF BENEFIT PLAN AFFIDAVIT
Re: Southpoint Residential Mortgage Securities Corporation
Pass-Through Certificates,
Series ___-__ (the "Trust"), Class ___
STATE OF ______________________)
) ss.:
CITY OF _______________________)
Under penalties of perjury, I, the undersigned, declare that, to the best
of my knowledge and belief, the following representations are true, correct, and
complete.
1. I am a duly authorized officer of _______________________ (the
"Transferee"), whose taxpayer identification number is ________, and on behalf
of which I have the authority to make this affidavit.
2. The Transferee either (i) is not a Plan Investor or (ii) has provided
the Master Servicer and the Trustee, at its own expense, with a Benefit Plan
Opinion.
3. If the Transferee is an insurance company: (i) none of the funds used
by it in connection with its purchase of the Securities constitute "plan assets"
as defined in the Plan Asset Regulations and (ii) its purchase of the Securities
shall not result in the Securities or the assets of the Trust being deemed to be
"plan assets" as defined in the Plan Asset Regulations.
All capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Pooling and Master Servicing Agreement,
dated as of _________ 1, ___, which incorporates by reference the Standard Terms
thereto, among Southpoint Residential Mortgage Securities Corporation, the
Master Servicer and the Trustee.
IN WITNESS WHEREOF, the Transferee has caused this instrument to be duly
executed on its behalf, by its duly authorized officer this ____ day of
_______________, ___.
__________________________________
[Name of Transferee]
By:_______________________________
Its:______________________________
Exhibit F-1
Personally appeared before me _______________________________, known or
proved to me to be the same person who executed the foregoing instrument and to
be a __________________________ of the Transferee, and acknowledged to me that
he or she executed the same as his or her free act and deed and as the free act
and deed of the Transferee.
Subscribed and sworn before me this ______ day of ____________, ____.
__________________________________
Notary Public
My commission expires the _______ day of ______________, ____.
Exhibit F-2
Exhibit G
FORM OF RESIDUAL TRANSFEREE AGREEMENT
SOUTHPOINT RESIDENTIAL MORTGAGE SECURITIES CORPORATION
PASS-THROUGH CERTIFICATES, SERIES ___-_, CLASS __
_________________
(DATE)
Southpoint Residential Mortgage Securities Corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇ Tower
Fifty Front Street, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[Master Servicer]
[Address]
[Address]
Attn: Master Servicing Department
Ladies and Gentlemen:
In connection with the purchase on the date hereof of the captioned
securities (the "Residual Securities"), the undersigned (the "Transferee")
hereby certifies and covenants to the transferor, the Company, the Master
Servicer, the Trustee and the Trust as follows:
1. Representations and Warranties. The Transferee represents and
------------------------------
warrants:
(a) The Transferee's taxpayer identification number is as set forth
on the signature page hereof;
(b) The Transferee is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which the Transferee is
organized, is authorized to invest in the Residual Securities and to enter into
this Agreement, and has duly executed and delivered this Agreement;
(c) The Transferee represents that (i) it understands that the
Residual Securities represent for federal income tax purposes a "residual
interest" in one or more real estate mortgage investment conduits (each, a
"REMIC") and that, as the holder of the Residual Securities, it will be required
to take into account, in determining its taxable income, its pro rata share of
the taxable income of each such REMIC, (ii) it understands that it may incur
federal income tax liabilities with respect to the Residual Securities in excess
of any cash flows generated by such Residual Securities; (iii) it has the
financial wherewithal and intends to pay any tax imposed on the income that it
derives from the Securities as they become due, and (iv) it
Exhibit G-1
has historically paid its debts as they became due and intends to pay its debts
as they become due in the future;
(d) The Transferee has knowledge in financial and business matters
and is capable of evaluating the merits and risks of an investment in the
Residual Securities; the Transferee has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision;
and the Transferee is able to bear the economic risk of an investment in the
Residual Securities and can afford a complete loss of such investment;
*(e) The Transferee is acquiring the Residual Securities for its own
account as principal and not with a view to the resale or distribution thereof,
in whole or in part, in violation of Section 5 of the Securities Act of 1933, as
amended (the "Act"); and
*(f) The Transferee confirms that the Company has made available to
the Transferee the opportunity to ask questions of, and receive answers from,
the Company concerning the Company, the Trust, the purchase by the Transferee of
the Residual Securities and all matters relating thereto, and to obtain
additional information relating thereto that the Company possesses or can
acquire without unreasonable effort or expense.
2. Covenants. The Transferee covenants:
---------
/1/(a) The Transferee will not make a public offering of the Residual
Securities, and will not reoffer or resell the Residual Securities in a manner
that would render the issuance and sale of the Residual Securities whether
considered together with the resale or otherwise, a violation of the Act, or any
state securities or "Blue Sky" laws or require registration pursuant thereto;
(b) The Transferee agrees that, in its capacity as a holder of the
Residual Securities, it will assert no claim or interest in the Mortgage Assets
by reason of owning the Residual Securities other than with respect to amounts
that may be properly and actually payable to the Transferee pursuant to the
terms of the Pooling and Master Servicing Agreement and the Securities;
(c) If applicable, the Transferee will comply with respect to the
Residual Securities in all material respects with applicable regulatory
guidelines relating to the ownership of mortgage derivative products;
(d) Upon notice thereof, the Transferee agrees to any future
amendment to the provisions of the Pooling and Master Servicing Agreement
relating to the transfer of the Residual Securities (or any interest therein)
that counsel to the Company or the Trust may deem necessary to ensure that any
such transfer will not result in the imposition of any tax on the Trust;
_____________________________
/1/ These representations and covenants are to be deleted if the Residual
Securities are not Private Securities
Exhibit G-2
(e) The Transferee hereby agrees that the Master Servicer or an
affiliate thereof will (i) supervise or engage in any action necessary or
advisable to preserve the status of each related REMIC as a REMIC, (ii) be, and
perform the functions of, each such REMIC's tax matters person ("TMP"), and
(iii) employ on a reasonable basis counsel, accountants, and professional
assistance to aid in the preparation of tax returns or the performance of the
above;
(f) The Transferee hereby agrees to cooperate with the TMP and to
take any action required of it by the REMIC Provisions in order to create or
maintain the REMIC status of each related REMIC;
(g) The Transferee hereby agrees that it will not take any action
that could endanger the REMIC status of any related REMIC or result in the
imposition of tax on any such REMIC unless counsel for, or acceptable to, the
TMP has provided an opinion that such action will not result in the loss of such
REMIC status or the imposition of such tax, as applicable;
(h) The Transferee hereby agrees to be bound by all of the provisions
of the Pooling and Master Servicing Agreement applicable to the holders of a
Residual Security including, but not limited to, Section 5.05 of the Standard
Terms (which relates to the transfer of a Residual Security), and acknowledges
that each Residual Security will bear a legend setting forth the applicable
restrictions on transfer;
(i) The Transferee hereby agrees that it shall pay any tax or
reporting costs borne by a REMIC as result of its purchase of the Residual
Securities or any beneficial interest therein in violation of Section 5.05 of
the Pooling and Master Servicing Agreement to the extent such tax or reporting
costs are not paid by the Transferor or by the Trustee out of amounts that
otherwise would have been paid to the Transferee;
(j) The Transferee hereby agrees to indemnify and hold harmless the
Company, the Master Servicer, the Trustee, the Trust and each other holder of a
Residual Security from and against any tax liability or reporting costs arising
from its violation of the restrictions on transfer contained in Section 5.05 of
the Pooling and Master Servicing Agreement or its breach of any of its
representations, warranties, or covenants contained herein; and
(k) The Transferee agrees that it will take no action to question or
invalidate the interest of the Trust in the Mortgage Assets or seek or maintain
any claim or interest in the Mortgage Assets having a priority over the interest
of the Trust in such Mortgage Assets.
3. Acknowledgments.
---------------
(a) The Transferee acknowledges that, if the Residual Securities are
Private Securities, the Residual Securities have not been registered under the
Act or registered or qualified under any state securities laws and that no
transfer may be made unless the Purchased Securities are registered under the
Act and under applicable state law or unless an exemption from such registration
is available. The Transferee further understands that neither the Company, the
Master Servicer nor the Trust is under any obligation to register the Security
or make an exemption from such registration available.
Exhibit G-3
(b) The Transferee acknowledges that if a Residual Security is
transferred to a Non-U.S. Person, the transfer will not be recognized by the
Withholding Agent (as defined below) unless the Withholding Agent has received
from the Transferee an affidavit substantially in the form of Exhibit H-1
-----------
attached to the Standard Terms to Pooling and Master Servicing Agreement.
(c) The Transferee acknowledges that if any United States federal
income tax is due at the time a Non-U.S. Person transfers a Residual Security,
the Trustee or its designated Paying Agent or other person who is liable to
withhold federal income tax from a distribution on a Residual Security under
sections 1441 and 1442 of the Code and the regulations thereunder (the
"Withholding Agent") may (i) withhold an amount equal to the taxes due upon
disposition of the Security from future distributions made with respect to the
Security to the Transferee (after giving effect to the withholding of taxes
imposed on such Transferee), and (ii) pay the withheld amount to the Internal
Revenue Service unless satisfactory written evidence of payment of the taxes due
by the transferor has been provided to the Withholding Agent. Moreover, the
Transferee acknowledges the Withholding Agent may (x) hold distributions on a
Security, without interest, pending determination of amounts to be withheld, (y)
withhold other amounts required to be withheld pursuant to United States federal
income tax law, if any, from distributions that otherwise would be made to such
Transferee on each Security it holds, and (z) pay to the Internal Revenue
Service all such amounts withheld.
(d) The Transferee acknowledges that the transfer of all or part of
the Residual Securities that have "tax avoidance potential" (as defined in
Treasury Regulations section 1.860G-3(a)(2) or any successor provision) to a
Non-U.S. Person will be disregarded for all federal income tax purposes, and
that Treasury Regulations or other administrative guidance issued by the
Treasury may effectively prohibit the transfer of the Residual Securities to
Non-U.S. Persons.
(e) The Transferee acknowledges that the transfer of the Residual
Securities to a U.S. Person will be disregarded for all federal income tax
purposes if a significant purpose of the transfer is to impede the assessment or
collection of the taxes and expenses associated with the security within the
meaning of Treasury regulation section 1.860E-1(c)(1).
IN WITNESS WHEREOF, the undersigned has caused this Agreement be validly
executed by its duly authorized representative as of the day and year first
above written.
________________________________________________
[Name of Transferee]
By: ________________________________________
Its: ________________________________________
Taxpayer ID # ___________________________________
Exhibit G-4
Exhibit H-1
FORM OF NON-U.S. PERSON AFFIDAVIT
AND AFFIDAVIT PURSUANT TO SECTIONS
860D(a)(6)(A) and 860E(e)(4)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
Re: Southpoint Residential Mortgage Securities Corporation
Pass-Through Certificates,
Series ___-__ (the "Trust"), Class __
STATE OF ____________________ )
) ss.:
CITY OF ______________________ )
Under penalties of perjury, I, the undersigned, declare that to the best of
my knowledge and belief, the following representations are true, correct and
complete:
1. I am a duly authorized officer of ___________________ (the
"Transferee"), and on behalf of which I have the authority to make this
affidavit.
2. The Transferee is acquiring all or a portion of the securities (the
"Residual Securities"), which represent a residual interest in one or more real
estate mortgage investment conduits (each, a "REMIC") for which elections are to
be made under Section 860D of the Internal Revenue Code of 1986, as amended (the
"Code").
3. The Transferee is a foreign person within the meaning of Treasury
Regulation Section 1.860G-3(a)(1) (i.e., a person other than (i) a citizen or
resident of the United States, (ii) a corporation or partnership that is
organized under the laws of the United States or any jurisdiction thereof or
therein, or (iii) an estate or trust that is subject to United States federal
income tax regardless of the source of its income) who would be subject to
United States income tax withholding pursuant to Section 1441 or 1442 of the
Code on income derived from the Residual Securities (a "Non-U.S. Person").
4. The Transferee agrees that it will not hold the Residual Securities in
connection with a trade or business in the United States, and the Transferee
understands that it will be subject to United States federal income tax under
sections 871 and 881 of the Code in accordance with section 860G of the Code and
any Treasury regulations issued thereunder on "excess inclusions" that accrue
with respect to the Residual Securities during the period the Transferee holds
the Residual Securities.
5. The Transferee understands that the federal income tax on excess
inclusions with respect to the Residual Securities may be withheld in accordance
with section 860G(b) of the Code from distributions that otherwise would be made
to the Transferee on the Residual Securities and, to the extent that such tax
has not been imposed previously, that such tax may be
Exhibit H-1-1
imposed at the time of disposition of any such Residual Security pursuant to
section 860G(b) of the Code.
6. The Transferee agrees (i) to file a timely United States federal
income tax return for the year in which disposition of a Residual Security it
holds occurs (or earlier if required by law) and will pay any United States
federal income tax due at that time and (ii) if any tax is due at that time, to
provide satisfactory written evidence of payment of such tax to the Trustee or
its designated paying agent or other person who is liable to withhold federal
income tax from a distribution on the Residual Securities under sections 1441
and 1442 of the Code and the regulations thereunder (the "Withholding Agent").
7. The Transferee understands that until it provides written evidence of
the payment of tax due upon the disposition of a Residual Security to the
Withholding Agent pursuant to paragraph 6 above, the Withholding Agent may (i)
withhold an amount equal to such tax from future distributions made with respect
to the Residual Security to subsequent transferees (after giving effect to the
withholding of taxes imposed on such subsequent transferees), and (ii) pay the
withheld amount to the Internal Revenue Service.
8. The Transferee understands that (i) the Withholding Agent may withhold
other amounts required to be withheld pursuant to United States federal income
tax law, if any, from distributions that otherwise would be made to such
transferee on each Residual Security it holds and (ii) the Withholding Agent may
pay to the Internal Revenue Service amounts withheld on behalf of any and all
former holders of each Residual Security held by the Transferee.
9. The Transferee understands that if it transfers a Residual Security
(or any interest therein) to a United States Person (including a foreign person
who is subject to net United States federal income taxation with respect to such
Residual Security), the Withholding Agent may disregard the transfer for federal
income tax purposes if the transfer would have the effect of allowing the
Transferee to avoid tax on accrued excess inclusions and may continue to
withhold tax from future distributions as though the Residual Security were
still held by the Transferee.
10. The Transferee understands that a transfer of a Residual Security (or
any interest therein) to a Non-U.S. Person (i.e., a foreign person who is not
subject to net United States federal income tax with respect to such Residual
Security) will not be recognized unless the Withholding Agent has received from
the transferee an affidavit in substantially the same form as this affidavit
containing these same agreements and representations.
11. The Transferee understands that distributions on a Residual Security
may be delayed, without interest, pending determination of amounts to be
withheld.
12. The Transferee is not a "Disqualified Organization" (as defined
below), and the Transferee is not acquiring a Residual Security for the account
of, or as agent or nominee of, or with a view to the transfer of direct or
indirect record or beneficial ownership to, a Disqualified Organization. For
the purposes hereof, a Disqualified Organization is any of the following: (i)
the United States, any State or political subdivision thereof, any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing; (ii) any organization (other than a ▇▇▇▇▇▇'▇ cooperative
as defined in Section 521 of the Code) that is
Exhibit H-1-2
exempt from federal income taxation (including taxation under the unrelated
business taxable income provisions of the Code); (iii) any rural telephone or
electrical service cooperative described in Section 1381(a)(2)(C) of the Code;
or (iv) any other entity so designated by Treasury rulings or regulations
promulgated or otherwise in effect as of the date hereof. In addition, a
corporation will not be treated as an instrumentality of the United States or of
any state or political subdivision thereof if all of its activities are subject
to tax and, with the exception of the Federal Home Loan Mortgage Corporation, a
majority of its board of directors is not selected by such governmental unit.
13. The Transferee agrees to consent to any amendment of the Pooling and
Master Servicing Agreement that shall be deemed necessary by the Company (upon
the advice of counsel to the Company) to constitute a reasonable arrangement to
ensure that no interest in a Residual Security will be owned directly or
indirectly by a Disqualified Organization.
14. The Transferee acknowledges that Section 860E(e) of the Code would
impose a substantial tax on the transferor or, in certain circumstances, on an
agent for the Transferee, with respect to any transfer of any interest in any
Residual Security to a Disqualified Organization.
Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Pooling and Master Servicing Agreement, dated
as of _______________, ____, which incorporates by reference the Standard Terms
thereto, among Southpoint Residential Mortgage Securities Corporation, the
Master Servicer, and the Trustee.
IN WITNESS WHEREOF, the Transferee has caused this instrument to be duly
executed on its behalf, by its duly authorized officer as of the _______ day of
_____________, ____.
________________________________________________
[Name of Transferee]
By: ________________________________________
Its: ________________________________________
Exhibit H-1-3
Personally appeared before me ___________________________, known or proved
to me to be the same person who executed the foregoing instrument and to be a
______________________ of the Transferee, and acknowledged to me that he or she
executed the same as his or her free act and deed and as the free act and deed
of the Transferee.
Subscribed and sworn before me this ______ day of __________, ___.
________________________________________________
Notary Public
My commission expires the _____ day of ________________, ___.
Exhibit ▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF U.S. PERSON AFFIDAVIT
AND AFFIDAVIT PURSUANT TO SECTIONS
860D(a)(6)(A) and 860E(e)(4)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
Re: Southpoint Residential Mortgage Securities Corporation
Pass-Through Certificates,
Series ___-__ (the "Trust"), Class ___
STATE OF ____________________)
) ss.:
CITY OF _____________________)
Under penalties of perjury, I, the undersigned declare that, to the best of
my knowledge and belief, the following representations are true, correct and
complete:
1. I am a duly authorized officer of ______________________ (the
"Transferee"), on behalf of which I have the authority to make this affidavit.
2. The Transferee is acquiring all or a portion of the securities (the
"Residual Securities"), which represent a residual interest in one or more real
estate mortgage investment conduits (each, a "REMIC") for which elections are to
be made under Section 860D of the Internal Revenue Code of 1986, as amended (the
"Code").
3. The Transferee either is (i) a citizen or resident of the United
States, (ii) a domestic partnership or corporation, (iii) an estate or trust
that is subject to United States federal income tax regardless of the source of
its income, or (iv) a foreign person who would be subject to United States
income taxation on a net basis on income derived from the Residual Securities (a
"U.S. Person").
4. The Transferee is a not a "Disqualified Organization" (as defined
below), and the Transferee is not acquiring a Residual Security for the account
of, or as agent or nominee of, or with a view to the transfer of direct or
indirect record or beneficial ownership to, a Disqualified Organization. For
the purposes hereof, a Disqualified Organization is any of the following: (i)
the United States, any state or political subdivision thereof, any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing; (ii) any organization (other than a ▇▇▇▇▇▇'▇ cooperative
as defined in Section 521 of the Code) that is exempt from federal income
taxation (including taxation under the unrelated business taxable income
provisions of the Code); (iii) any rural telephone or electrical service
cooperative described in (S) 1381(a)(2)(C) of the Code; or (iv) any other entity
so designated by Treasury rulings or regulations promulgated or otherwise in
effect as of the date hereof. In addition, a corporation will not be treated as
an instrumentality of the United States or of any state or
Exhibit H-2-1
political subdivision thereof if all of its activities are subject to tax and,
with the exception of the Federal Home Loan Mortgage Corporation, a majority of
its board of directors is not selected by such governmental unit.
5. The Transferee agrees to consent to any amendment of the Pooling and
Master Servicing Agreement that shall be deemed necessary by the Company (upon
the advice of counsel to the Company) to constitute a reasonable arrangement to
ensure that no interest in a Residual Security will be owned directly or
indirectly by a Disqualified Organization.
6. The Transferee acknowledges that Section 860E(e) of the Code would
impose a substantial tax on the transferor or, in certain circumstances, on an
agent for the Transferee, with respect to any transfer of any interest in any
Residual Security to a Disqualified Organization.
Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Pooling and Master Servicing Agreement, dated
as of _______________, ____, which incorporates by reference the Standard Terms
thereto, among Southpoint Residential Mortgage Securities Corporation, the
Master Servicer, and the Trustee.
IN WITNESS WHEREOF, the Transferee has caused this instrument to be duly
executed on its behalf, by its duly authorized officer this ____ day of ______,
____.
________________________________________________
[Name of Transferee]
By: ________________________________________
Its: ________________________________________
Personally appeared before me ___________________, known or proved to me to
be the same person who executed the foregoing instrument and to be a
_______________ of the Transferee, and acknowledged to me that he or she
executed the same as his or her free act and deed and as the free act and deed
of the Transferee.
Subscribed and sworn before me this ____ day of ________, ____.
________________________________________________
Notary Public
My commission expires the ____ day of ____________________, ____.
Exhibit H-2-2
