--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
IMPAC SECURED ASSETS CORP.,
Depositor,
IMPAC FUNDING CORPORATION
Master Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Trustee
---------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of June 1, 1998
---------------------------------
Mortgage Pass-Through Certificates
Series 1998-2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
PAGE
ARTICLE I
DEFINITIONS..........................................................3
1.01. Defined Terms.................................................3
Accrued Certificate Interest.........................................3
Advance ............................................................4
Agreement............................................................4
Anniversary..........................................................4
Assignment...........................................................4
Available Distribution Amount........................................4
Bankruptcy Amount....................................................5
Bankruptcy Code......................................................5
Bankruptcy Loss......................................................5
Book-Entry Certificate...............................................5
Business Day.........................................................5
Cash Liquidation.....................................................5
Certificate..........................................................6
Certificate Account..................................................6
Certificate Account Deposit Date.....................................6
Certificateholder" or "Holder........................................6
Certificate Owner....................................................6
Certificate Principal Balance........................................6
Certificate Register.................................................7
Class ...............................................................7
Class A Certificate..................................................7
Class B Percentage...................................................8
Class B-1 Certificate................................................8
Class B-1 Percentage.................................................8
Class B-1 Prepayment Distribution Trigger............................8
Class B-2 Certificate................................................8
Class B-2 Percentage.................................................9
Class B-2 Prepayment Distribution Trigger............................9
Class B-3 Certificate................................................9
Class B-3 Percentage.................................................9
Class B-3 Prepayment Distribution Trigger............................9
Class M Certificate..................................................9
Class M Percentage...................................................9
Class M-1 Percentage................................................10
Class M-2 Percentage................................................10
Class M-2 Prepayment Distribution Trigger...........................10
Class M-3 Percentage................................................10
i
PAGE
Class M-3 Prepayment Distribution Trigger...........................10
Closing Date........................................................11
CMAC ...............................................................11
CMAC Insured Loans..................................................11
CMAC PMI Policy.....................................................11
CMAC PMI Policy Rate................................................11
Code ...............................................................11
Collateral Value....................................................11
Compensating Interest...............................................11
Corporate Trust Office..............................................11
Curtailment.........................................................12
Custodial Account...................................................12
Cut-off Date........................................................12
Debt Service Reduction..............................................12
Defaulted Mortgage Loan.............................................12
Defaulted Mortgage Loss.............................................12
Deficient Valuation.................................................12
Definitive Certificate..............................................12
Deleted Mortgage Loan...............................................12
Depositor...........................................................12
Depository..........................................................12
Depository Participant..............................................13
Determination Date..................................................13
Disqualified Organization...........................................13
Distribution Date...................................................13
Due Date ...........................................................13
Due Period..........................................................13
Eligible Account....................................................13
Event of Default....................................................14
Excess Bankruptcy Loss..............................................14
Excess Fraud Loss...................................................14
Excess Proceeds.....................................................14
Excess Special Hazard Loss..........................................14
Extraordinary Events................................................14
Extraordinary Losses................................................15
FDIC ...............................................................15
Final Disposition...................................................15
FHLMC ..............................................................15
FNMA ...............................................................15
Fraud Loss Amount...................................................16
Fraud Losses........................................................16
Funding Date........................................................16
Initial Certificate Principal Balance...............................16
Initial Notional Amount.............................................16
ii
PAGE
Insurance Policy....................................................16
Insurance Proceeds..................................................16
Interest Only Certificate...........................................17
Late Collections....................................................17
Liquidation Proceeds................................................17
Loan-to-Value Ratio.................................................17
Lockout Certificates................................................17
....................................................................17
Lockout Percentage..................................................17
Maturity Date.......................................................18
Master Servicer.....................................................18
Monthly Payment.....................................................18
▇▇▇▇▇'▇ ...........................................................18
Mortgage ...........................................................18
Mortgage File.......................................................18
Mortgage Loan.......................................................18
Mortgage Loan Accrued Interest......................................18
Mortgage Loan Purchase Agreement....................................19
Mortgage Loan Schedule..............................................19
Mortgage Note.......................................................20
Mortgage Rate.......................................................20
Mortgaged Property..................................................20
Mortgagor...........................................................20
Net Mortgage Rate...................................................20
Nonrecoverable Advance..............................................20
Non-United States Person............................................20
Notional Amount.....................................................20
Officers' Certificate...............................................21
Opinion of Counsel..................................................21
Original Senior Percentage..........................................21
OTS ................................................................21
Outstanding Mortgage Loan...........................................21
Ownership Interest..................................................21
Pass-Through Rate...................................................21
Percentage Interest.................................................22
Permitted Investment................................................22
Permitted Transferee................................................23
Person .............................................................23
Pool Strip Rate.....................................................23
Prepayment Distribution Percentage..................................23
Prepayment Distribution Trigger.....................................25
Prepayment Interest Shortfall.......................................25
Prepayment Period...................................................25
Primary Hazard Insurance Policy.....................................25
iii
PAGE
Primary Insurance Policy............................................25
Principal Prepayment................................................25
Principal Prepayment in Full........................................25
Purchase Price......................................................25
Qualified Insurer...................................................26
Qualified Substitute Mortgage Loan..................................26
Rating Agency.......................................................26
Realized Loss.......................................................27
Record Date.........................................................27
Regular Certificate.................................................27
Relief Act..........................................................27
REMIC ..............................................................27
REMIC Provisions....................................................28
Remittance Report...................................................28
REO Acquisition.....................................................28
REO Disposition.....................................................28
REO Imputed Interest................................................28
REO Proceeds........................................................28
REO Property........................................................29
Request for Release.................................................29
Residual Certificate................................................29
Responsible Officer.................................................29
Scheduled Accrual Certificate.......................................29
Scheduled Interest Only Certificate.................................29
Seller .............................................................29
Senior Accelerated Distribution Percentage..........................29
Senior Interest Distribution Amount.................................30
Senior Percentage...................................................31
Senior Principal Distribution Amount................................31
Servicing Account...................................................31
Servicing Advances..................................................31
Servicing Fees......................................................31
Servicing Fee Rate..................................................31
Servicing Officer...................................................31
Single Certificate..................................................31
Special Hazard Amount...............................................32
Special Hazard Loss.................................................32
Special Hazard Percentage...........................................33
Standard & Poor's...................................................33
Startup Day.........................................................33
Stated Principal Balance............................................33
Subordinate Certificate.............................................33
Subordinate Percentage..............................................33
Subordinate Principal Distribution Amount...........................33
iv
PAGE
Sub-Servicer........................................................34
Sub-Servicer Remittance Date........................................34
Sub-Servicing Account...............................................34
Sub-Servicing Agreement.............................................34
Tax Returns.........................................................34
Transfer ...........................................................35
Transferor..........................................................35
Trust Fund..........................................................35
Trustee ...........................................................35
Trustee's Fee.......................................................35
Trustee Fee Rate....................................................35
Uncertificated REMIC I Accrued Interest.............................35
Uncertificated REMIC I IO Notional Amount...........................36
Uncertificated REMIC I IO Regular Interest..........................36
Uncertificated REMIC I Pass-Through Rate............................36
Uncertificated REMIC I Regular Interest X...........................36
Uncertificated REMIC I Regular Interest Y...........................36
Uncertificated REMIC I Regular Interests............................37
Uncertificated REMIC I IO Regular Interest Distribution Amount......37
Uncertificated REMIC I Regular Interest X Distribution Amount.......37
Uncertificated REMIC I Regular Interest Y Distribution Amount.......37
Uncertificated REMIC I Regular Interest Distribution Amounts........37
Uninsured Cause.....................................................37
United States Person................................................37
Variable Strip Certificates.........................................37
Voting Rights.......................................................37
Wendover ...........................................................38
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES...................................39
2.01. Conveyance of Mortgage Loans...............................39
2.02. Acceptance of the Trust Fund by the Trustee................42
2.03. Representations, Warranties and Covenants of the Master
Servicer and the Depositor.................................43
2.04. Representations and Warranties of the Seller...............45
2.05. Issuance of Certificates Evidencing Interests in the
REMIC I Certificates.......................................47
SECTION 2.06.Conveyance of Uncertificated REMIC I Regular
Interests; Acceptance by the Trustee...........47
SECTION 2.07. Issuance of Certificates Evidencing Interest in
REMIC II..............................................48
ARTICLE III
v
ADMINISTRATION AND SERVICING
OF THE TRUST FUND...................................................48
3.01. Master Servicer to Act as Master Servicer..................48
3.02. Sub-Servicing Agreements Between Master Servicer
and Sub-Servicers..........................................50
3.03. Successor Sub-Servicers....................................51
3.04. Liability of the Master Servicer...........................51
3.05. No Contractual Relationship Between Sub-Servicers and
Trustee or Certificateholders..............................51
3.06. Assumption or Termination of Sub-Servicing Agreements
by Trustee.................................................52
3.07. Collection of Certain Mortgage Loan Payments...............53
3.08. Sub-Servicing Accounts.....................................54
3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.........................................54
3.10. Custodial Account..........................................55
3.11. Permitted Withdrawals From the Custodial Account...........56
3.12. Permitted Investments......................................57
3.13. Maintenance of Primary Hazard Insurance. ..................57
3.14. Enforcement of Due-on-Sale Clauses; Assumption Agreements..59
3.15. Realization Upon Defaulted Mortgage Loans..................61
3.16. Trustee to Cooperate; Release of Mortgage Files............62
3.17. Servicing Compensation.....................................63
3.18. Maintenance of Certain Servicing Policies..................63
3.19. Annual Statement as to Compliance..........................64
3.20. Annual Independent Public Accountants' Servicing Statement.64
3.21. Access to Certain Documentation............................65
3.22. Title, Conservation and Disposition of REO Property........66
3.23. Additional Obligations of the Master Servicer..............68
3.24 Optional Purchase of Defaulted Mortgage Loans..............68
3.25. Additional Obligations of the Depositor....................68
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS......................................70
4.01. Certificate Account; Distributions.........................70
4.02. Statements to Certificateholders...........................79
4.03. Remittance Reports; Advances by the Master Servicer........81
4.04. Allocation of Realized Losses..............................82
4.05. Information Reports to Be Filed by the Master Servicer.....83
4.06. Compliance with Withholding Requirements...................84
ARTICLE V
THE CERTIFICATES....................................................86
5.01. The Certificates...........................................86
5.02. Registration of Transfer and Exchange of Certificates......87
vi
PAGE
5.03. Mutilated, Destroyed, Lost or Stolen Certificates..........92
5.04. Persons Deemed Owners......................................93
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER...............................94
6.01. Liability of the Depositor and the Master Servicer.........94
6.02. Merger, Consolidation or Conversion of the Depositor or the
Master Servicer............................................94
6.03. Limitation on Liability of the Depositor, the Master
Servicer and Others........................................94
6.04. Limitation on Resignation of the Master Servicer...........95
6.05. Sale and Assignment of Master Servicing....................96
ARTICLE VII
DEFAULT.............................................................97
7.01. Events of Default..........................................97
7.02. Trustee to Act; Appointment of Successor...................99
7.03. Notification to Certificateholders........................100
7.04. Waiver of Events of Default...............................100
7.05. List of Certificateholders................................100
ARTICLE VIII
CONCERNING THE TRUSTEE.............................................101
8.01. Duties of Trustee.........................................101
8.02. Certain Matters Affecting the Trustee.....................102
8.03. Trustee Not Liable for Certificates or Mortgage Loans.....103
8.04. Trustee May Own Certificates..............................104
8.05. Trustee's Fees............................................104
8.06. Eligibility Requirements for Trustee......................104
8.07. Resignation and Removal of the Trustee....................105
8.08. Successor Trustee.........................................106
8.09. Merger or Consolidation of Trustee........................106
8.10. Appointment of Co-Trustee or Separate Trustee.............107
ARTICLE IX
TERMINATION........................................................109
9.01. Termination Upon Repurchase or Liquidation of All Mortgage
Loans or upon Purchase of Certificates....................109
9.03. Additional Termination Requirements.......................112
vii
ARTICLE X
REMIC PROVISIONS...................................................114
10.01. REMIC Administration......................................114
10.02. Prohibited Transactions and Activities....................117
10.03. Master Servicer and Trustee Indemnification...............117
ARTICLE XI
MISCELLANEOUS PROVISIONS...........................................118
11.01. Amendment.................................................118
11.02. Recordation of Agreement; Counterparts....................119
11.03. Limitation on Rights of Certificateholders................120
11.04. Governing Law.............................................121
11.05. Notices...................................................121
11.06. Severability of Provisions................................121
11.07. Successors and Assigns; Third Party Beneficiary...........121
11.08. Article and Section Headings..............................121
11.09. Notice to Rating Agencies.................................122
Signatures
Acknowledgments
Exhibit A Form of Class A Certificate
Exhibit B-1 Form of Subordinate Certificate
Exhibit B-2 Form of Class R-I and Class R-II Certificate
Exhibit C Form of Trustee Initial Certification
Exhibit D Form of Trustee Final Certification
Exhibit E Form of Remittance Report
Exhibit F-1 Request for Release
Exhibit F-2 Request for Release for Mortgage Loans Paid in Full
Exhibit G-1 Form of Investor Representation Letter
Exhibit G-2 Form of Transferor Representation Letter
Exhibit G-3 Form of Rule 144A Investment Representation
Exhibit G-4 Transferor Certificate for Transfers of Residual
Certificates
Exhibit G-5 Transfer Affidavit and Agreement for Transfers of
Residual Certificates
Exhibit G-6 Form of Investor Representation Letter for Insurance
Companies
Exhibit H Mortgage Loan Schedule
Exhibit I Seller Representations and Warranties
Exhibit J Form of Notice Under Section 3.24
Exhibit K Schedule of Percentage Interests in Certificates Sold
Exhibit L Scheduled Principal Balances and Targeted Principal
Balances
viii
This Pooling and Servicing Agreement, dated and effective as of June
1, 1998, among Impac Secured Assets Corp., as depositor (the "Depositor"), Impac
Funding Corporation, as master servicer (the "Master Servicer"), and Bankers
Trust Company of California, N.A., as trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Depositor intends to sell mortgage pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple classes,
which in the aggregate will evidence the entire beneficial ownership interest in
the Mortgage Loans (as defined herein). As provided herein, the Trustee will
make an election to treat the entire segregated pool of assets described in the
definition of REMIC I (as defined herein), and subject to this Agreement
(including the Mortgage Loans), as a real estate mortgage investment conduit (a
"REMIC") for federal income tax purposes and such segregated pool of assets will
be designated as "REMIC I." The Uncertificated REMIC I Regular Interests will be
"regular interests" in REMIC I and the Class R-I Certificates will be the sole
class of "residual interests" in REMIC I for purposes of the REMIC Provisions
(as defined herein) under the federal income tax law. A segregated pool of
assets consisting of the Uncertificated REMIC I Regular Interests will be
designated as "REMIC," and the REMIC Administrator will make a separate REMIC
election with respect thereto. The Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11,
Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3 Certificates
will be "regular interests" in REMIC II, and the Class R-II Certificates will be
the sole class of "residual interests" therein for purposes of the REMIC
Provisions (as defined herein) under federal income tax law.
-2-
The following table irrevocably sets forth the designation, the
Uncertificated REMIC I Pass-Through Rate, the initial Uncertificated Balance
and, solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC I
Regular Interests. None of the REMIC I Regular Interests will be certificated.
Uncertificated REMIC I Initial Uncertificated Latest Possible
DESIGNATION PASS-THROUGH RATE PRINCIPAL BALANCE MATURITY DATE(1)
----------- ----------------- ----------------- ----------------
REMIC I Regular Interest X Variable(2) $83,469,712.51 June 25, 2028
REMIC I Regular Interest Y Variable(2) $41,883,993.00 June 25, 2028
REMIC I IO Regular Interest Variable(2) $(3) June 25, 2028
-----------------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the latest
possible maturity date for the Subsequent Mortgage Loans (as defined
herein) has been designated as the "latest possible maturity date" for
each REMIC I Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC I
Pass-Through Rate" herein.
(3) Based on the Uncertificated REMIC I IO Notional Amount.
The following table sets forth the designation, initial Pass-Through
Rate, aggregate initial Certificate Principal Balance and certain features for
each Class of Certificates comprising the certificated interests in the Trust
Fund created hereunder.
Aggregate Initial
Certificate Initial
Pass-Through Principal Maturity Ratings
DESIGNATION TYPE RATE BALANCE FEATURES DATE S&P FITCH
----------- ---- ------ --------- -------- ------ ----- -----
Class A-1 Senior 6.50% $41,883,993.00 Senior June 25, 2023 AAA AAA
Class A-2 Senior 0.35% $ 0(1) Senior/Interest Only June 25, 2023 AAAr AAA
Class A-3 Senior 6.85% $ 2,500,000.00 Senior/Accrual June 25, 2028 AAA AAA
Class A-4 Senior 6.75% $ 1,773,700.00 Senior June 25, 2028 AAA AAA
Class A-5 Senior 7.00% $ 1,182,467.00 Senior June 25, 2028 AAA AAA
Class A-6 Senior 6.85% $19,500,000.00 Senior June 25, 2028 AAA AAA
Class A-7 Senior 6.85% $30,727,000.00 Senior June 25, 2028 AAA AAA
Class A-8 Senior 6.85% $ 4,100,000.00 Senior June 25, 2028 AAA AAA
Class A-9 Senior 6.85% $ 1,750,000.00 Senior/Accrual Companion June 25, 2028 AAA AAA
Class A-10 Senior 6.85% $12,535,440.00 Senior/Lockout June 25, 2028 AAA AAA
Class A-11 Senior Variable Rate $ 0(1) Senior/Interest Only June 25, 2028 AAAr AAA
Class R-I Senior 6.85% $ 100.00 Residual/Senior June 25, 2028 AAA AAA
Class R-II Senior 6.85% $ 100.00 Residual/Senior June 25, 2028 AAA AAA
Class M-1 Mezzanine 6.85% $ 3,760,000.00 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇ N/A
Class M-2 Mezzanine 6.85% $ 1,566,900.00 Mezzanine June 25, 2028 A N/A
Class M-3 Mezzanine 6.85% $ 1,253,600.00 Mezzanine June 25, 2028 BBB N/A
Class B-1 Subordinate 6.85% $ 1,378,900.00 Subordinate June 25, 2028 BB N/A
Class B-2 Subordinate 6.85% $ 689,400.00 Subordinate June 25, 2028 B N/A
-3-
Class B-3 Subordinate 6.85% $ 752,205.51 Subordinate June 25, 2028 N/A N/A
-----------------------------
(1) Based on the related Notional Amount.
Solely for purposes of Section 1.860G-1(a)(4)(iii) of
the Treasury regulations, the Distribution Date immediately following the
maturity date for the Mortgage Loan with the latest maturity date in the
Mortgage Pool has been designated as the "latest possible maturity date" for the
Certificates.
As of the Cut-off Date, the Mortgage Loans have an
aggregate Stated Principal Balance equal to $125,354,405.51.
In consideration of the mutual agreements herein
contained, the Depositor, the Master Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall have the meanings
specified in this Article.
"Accretion Termination Date": The Class A-3 Accretion
Termination Date or Class A-9 Accretion Termination Date, as applicable.
"Accrual Certificates": The Class A-3 Certificates and
Class A-9 Certificates.
"Accrual Distribution Amount": The Class A-3 Accrual
Distribution Amount, or Class A-9 Accrual Distribution Amount, as applicable.
"Accrued Certificate Interest": With respect to each
Distribution Date, (a) as to any Certificate other than the Interest Only
Certificates, one month's interest accrued at the related Pass-Through Rate on
the Certificate Principal Balance thereof immediately prior to such Distribution
Date; and (b) as to any Interest Only Certificate, one month's interest accrued
at the then applicable Pass-Through Rate on the related Notional Amount thereof
immediately prior to such Distribution Date. Accrued Certificate Interest will
be calculated on the basis of a 360-day year consisting of twelve 30-day months.
In each case Accrued Certificate
-4-
Interest on any Class of Certificates will be reduced by the amount of (i)
Prepayment Interest Shortfalls, if any, which are not covered by the Master
Servicer with a payment of Compensating Interest pursuant to Section 3.23 with
respect to such Distribution Date, (ii) the interest portion (adjusted to the
related Net Mortgage Rate) of Realized Losses (including Excess Special Hazard
Losses, Excess Fraud Losses, Excess Bankruptcy Losses and Extraordinary Losses)
not allocated solely to one or more Classes of Certificates pursuant to Section
4.04 and (iii) any other interest shortfalls not covered by the subordination
provided by the Class M Certificates or Class B Certificates, including interest
that is not collectible from the Mortgagor pursuant to the Relief Act or similar
legislation or regulations as in effect from time to time with all such
reductions allocated among all of the Certificates in proportion to their
respective amounts of Accrued Certificate Interest payable on such Distribution
Date which would have resulted absent such reductions. In addition to that
portion of the reductions described in the preceding sentence that are allocated
to any Class of Class M Certificates or Class B Certificates, Accrued
Certificate Interest on any Class of the Class M Certificates or Class B
Certificates, as applicable, will be reduced by the interest portion (adjusted
to the related Net Mortgage Rate) of the portion of Realized Losses that are
allocated solely to the Class M and Class B Certificates, as applicable,
pursuant to Section 4.04.
"Advance": As to any Mortgage Loan, any advance made by
the Master Servicer on any Distribution Date pursuant to Section 4.03.
"Agreement": This Pooling and Servicing Agreement and
all amendments hereof.
"Anniversary": Each anniversary of June 1, 1998.
"Assignment": An assignment of Mortgage, notice of
transfer or equivalent instrument, in recordable form, which is sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property is located
to reflect of record the sale of the Mortgage.
"Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (a) the sum of (i) the balance on deposit
in the Custodial Account as of the close of business on the related
Determination Date and (ii) the aggregate amount of any Advances made and all
amounts required to be paid by the Master Servicer pursuant to Sections 3.13 and
3.23 by deposits into the Certificate Account on the immediately preceding
Certificate Account Deposit Date, reduced by (b) the sum, as of the close of
business on the related Determination Date, of (i) Monthly Payments collected
but due during a Due Period subsequent to the Due Period ending on the first day
of the month of the related Distribution Date, (ii) all interest or other income
earned on deposits in the Custodial Account or the Certificate Account, (iii)
any other amounts reimbursable or payable to the Master Servicer or any
Sub-Servicer pursuant to Section 3.11, (iv) the Servicing Fees payable on such
Distribution Date and (v) Insurance Proceeds, Liquidation Proceeds, Principal
Prepayments, REO Proceeds and the
-5-
proceeds of Mortgage Loan purchases made pursuant to Section 2.02, 2.04, 3.14,
3.22 or 3.24, in each case received or made in the month of such Distribution
Date.
"Bankruptcy Amount": As of any date of determination
prior to the first Anniversary, an amount equal to the excess, if any, of (A)
$100,000 over (B) the aggregate amount of Bankruptcy Losses allocated solely to
one or more specific Classes of Certificates in accordance with Section 4.04. As
of any date of determination on or after the first Anniversary, an amount equal
to the excess, if any, of the lesser of (a) the Bankruptcy Amount calculated as
of the close of business on the Business Day immediately preceding the most
recent Anniversary coinciding with or preceding such date of determination (or,
if such date of determination is an Anniversary, the Business Day immediately
preceding such date of determination) (for purposes of this definition, the
"Relevant Anniversary") and (b) the greater of (i) $75,000 and (ii) 0.0006 times
the aggregate principal balance of all the Mortgage Loans in the Mortgage Pool
as of the Relevant Anniversary having a Loan-to-Value Ratio at origination which
exceeds 75%.
The Bankruptcy Amount may be further reduced by the
Master Servicer (including accelerating the manner in which such coverage is
reduced) provided that prior to any such reduction, the Master Servicer shall
(i) obtain written confirmation from each Rating Agency that such reduction
shall not reduce the rating assigned to any Class of Certificates by such Rating
Agency below the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date by such Rating Agency and (ii) provide a
copy of such written confirmation to the Trustee.
"Bankruptcy Code": The Bankruptcy Code of 1978, as
amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a
Deficient Valuation or Debt Service Reduction.
"Book-Entry Certificate": Any Certificate registered in
the name of the Depository or its nominee.
"Business Day": Any day other than a Saturday, a Sunday
or a day on which banking institutions in California or New York (and such other
state or states in which the Custodial Account or the Certificate Account are at
the time located) or in the city in which the Corporate Trust Office of the
Trustee is located are authorized or obligated by law or executive order to
close.
"Cash Liquidation": As to any defaulted Mortgage Loan
other than a Mortgage Loan as to which an REO Acquisition occurred, a
determination by the Master Servicer that it has received all Insurance
Proceeds, Liquidation Proceeds and other payments or
-6-
cash recoveries which the Master Servicer reasonably and in good faith expects
to be finally recoverable with respect to such Mortgage Loan.
"Certificate": Any Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10,
Class A-11, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2, Class B-3,
Class R-I or Class R-II Certificate.
"Certificate Account": The trust account or accounts
created and maintained pursuant to Section 4.01, which shall be entitled
"Bankers Trust Company of California, N.A., in trust for registered holders of
Impac Secured Assets Corp., Mortgage Pass- Through Certificates, Series 1998-2,
and which account or accounts must each be an Eligible Account.
"Certificate Account Deposit Date": With respect to any
Distribution Date, the third Business Day immediately preceding such
Distribution Date.
"Certificateholder" or "Holder": The Person in whose
name a Certificate is registered in the Certificate Register, except that,
neither a Disqualified Organization nor a Non-United States Person shall be a
holder of a Residual Certificate for any purposes hereof and, solely for the
purposes of giving any consent pursuant to this Agreement, any Certificate
registered in the name of the Depositor or the Master Servicer or any affiliate
thereof shall be deemed not to be outstanding and the Voting Rights to which
such Certificate is entitled shall not be taken into account in determining
whether the requisite percentage of Voting Rights necessary to effect any such
consent has been obtained, except as otherwise provided in Section 11.01. The
Trustee shall be entitled to rely upon a certification of the Depositor or the
Master Servicer in determining if any Certificates are registered in the name of
the respective affiliate. All references herein to "Holders" or
"Certificateholders" shall reflect the rights of Certificate Owners as they may
indirectly exercise such rights through the Depository and participating members
thereof, except as otherwise specified herein; provided, however, that the
Trustee shall be required to recognize as a "Holder" or "Certificateholder" only
the Person in whose name a Certificate is registered in the Certificate
Register.
"Certificate Owner": With respect to a Book-Entry
Certificate, the Person who is the beneficial owner of such Certificate, as
reflected on the books of an indirect participating brokerage firm for which a
Depository Participant acts as agent, if any, and otherwise on the books of a
Depository Participant, if any, and otherwise on the books of the Depository.
"Certificate Principal Balance": With respect to any
Certificate other than an Interest Only Certificate, on any date of
determination, an amount equal to (i) the Initial Certificate Principal Balance
of such Certificate as specified on the face thereof, minus (ii) the sum
-7-
of (a) the aggregate of all amounts previously distributed with respect to such
Certificates (or any predecessor Certificate) and applied to reduce the
Certificate Principal Balance thereof pursuant to Section 4.01, and (b) the
aggregate of all reductions in Certificate Principal Balance deemed to have
occurred in connection with Realized Losses which were previously allocated to
such Certificate (or any predecessor Certificate) pursuant to Section 4.04. With
respect to each Class M Certificate, on any date of determination, an amount
equal to (i) the Initial Certificate Principal Balance of such Class M
Certificate as specified on the face thereof, minus (ii) the sum of (x) the
aggregate of all amounts previously distributed with respect to such Certificate
(or any predecessor Certificate) and applied to reduce the Certificate Principal
Balance thereof pursuant to Section 4.01 and (y) the aggregate of all reductions
in Certificate Principal Balance deemed to have occurred in connection with
Realized Losses which were previously allocated to such Certificate (or any
predecessor Certificate) pursuant to Section 4.04; provided, that if the
Certificate Principal Balances of the Class B Certificates have been reduced to
zero, the Certificate Principal Balance of each Class M Certificate of those
Class M Certificates outstanding with the highest numerical designation at any
given time shall thereafter be calculated to equal the Percentage Interest
evidenced by such Certificate times the excess, if any, of (A) the then
aggregate Stated Principal Balance of the Mortgage Loans over (B) the then
aggregate Certificate Principal Balance of all other Classes of Certificates
then outstanding. With respect to each Class B Certificate, on any date of
determination, an amount equal to (i) the Initial Certificate Principal Balance
of such Class B Certificate as specified on the face thereof, minus (ii) the sum
of (x) the aggregate of all amounts previously distributed with respect to such
Certificate (or any predecessor Certificate) and applied to reduce the
Certificate Principal Balance thereof pursuant to Section 4.01 and (y) the
aggregate of all reductions in Certificate Principal Balance deemed to have
occurred in connection with Realized Losses which were previously allocated to
such Certificate (or any predecessor Certificate) pursuant to Section 4.04;
provided, that the Certificate Principal Balance of each Class B Certificate of
those Class B Certificates outstanding with the highest numerical designation at
any given time shall be calculated to equal the Percentage Interest evidenced by
such Certificate times the excess, if any, of (A) the then aggregate Stated
Principal Balance of the Mortgage Loans over (B) the then aggregate Certificate
Principal Balance of all other Classes of Certificates then outstanding. The
Interest Only Certificates have no Certificate Principal Balance.
"Certificate Register": The register maintained
pursuant to Section 5.02.
"Class": Collectively, all of the Certificates bearing
the same designation.
"Class A Certificate": Any one of the Class ▇-▇, ▇▇▇▇▇
▇-▇, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class
A-9, Class A-10 or Class A-11 Certificates, each executed, authenticated and
delivered by the Trustee substantially in the form annexed hereto as Exhibit A
and each evidencing an interest designated as a "regular interest" in
-8-
REMIC II for purposes of the REMIC Provisions. The Class A-11 Certificates will
represent the entire beneficial ownership interest in the Uncertificated REMIC
II IO Regular Interests.
"Class A-3 Accretion Termination Date": With respect to
the Class A-3 Certificates, the earlier to occur of (i) the Distribution Date on
which the Certificate Principal Balance of the Class A-3 Certificates has been
reduced to zero and (ii) the Credit Support Depletion Date.
"Class A-3 Accrual Distribution Amount": As defined in
Section 4.01(f).
"Class A-9 Accretion Termination Date": With respect to
the Class A-9 Certificates, the earlier to occur of (i) the Distribution Date on
which the Certificate Principal Balance of the Class A-9 Certificates has been
reduced to zero and (ii) the Credit Support Depletion Date.
"Class A-9 Accrual Distribution Amount": As defined in
Section 4.01(g).
"Class B Percentage": The Class B-1 Percentage, Class
B-2 Percentage and Class B-3 Percentage.
"Class B-1 Certificate": Any one of the Class B-1
Certificates executed, authenticated and delivered by the Trustee substantially
in the form annexed hereto as Exhibit B-1, subordinate to the Class A
Certificates and the Class M Certificates with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04 and evidencing an
interest designated as a "regular interest" in REMIC II for purposes of the
REMIC Provisions.
"Class B-1 Percentage": With respect to any
Distribution Date, the lesser of 100% and a fraction, expressed as a percentage,
the numerator of which is the aggregate Certificate Principal Balance of the
Class B-1 Certificates immediately prior to such Distribution Date and the
denominator of which is the aggregate Stated Principal Balance of all of the
Mortgage Loans (or related REO Properties).
"Class B-1 Prepayment Distribution Trigger": With
respect to any Distribution Date, a test that shall be satisfied if the fraction
(expressed as a percentage) equal to the sum of the Certificate Principal
Balances of the Class B-1 Certificates, Class B-2 Certificates and Class B-3
Certificates immediately prior to such Distribution Date divided by the
aggregate Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) immediately prior to such Distribution Date is greater than or equal
to 2.25%.
-9-
"Class B-2 Certificate": Any one of the Class B-2
Certificates executed, authenticated and delivered by the Trustee substantially
in the form annexed hereto as Exhibit B-1, subordinate to the Class A
Certificates, Class M Certificates and Class B-1 Certificates with respect to
distributions and the allocation of Realized Losses as set forth in Section 4.04
and evidencing an interest designated as a "regular interest" in REMIC II for
purposes of the REMIC Provisions.
"Class B-2 Percentage": With respect to any
Distribution Date, the lesser of 100% and a fraction, expressed as a percentage,
the numerator of which is the aggregate Certificate Principal Balance of the
Class B-2 Certificates immediately prior to such Distribution Date and the
denominator of which is the aggregate Stated Principal Balance of all of the
Mortgage Loans (and related REO Properties) immediately prior to such
Distribution Date.
"Class B-2 Prepayment Distribution Trigger": With
respect to any Distribution Date, a test that shall be satisfied if the fraction
(expressed as a percentage) equal to the sum of the Certificate Principal
Balances of the Class B-2 Certificates and Class B-3 Certificates immediately
prior to such Distribution Date divided by the aggregate Stated Principal
Balance of all of the Mortgage Loans (and related REO Properties) immediately
prior to such Distribution Date is greater than or equal to 1.15%.
"Class B-3 Certificate": Any one of the Class B-3
Certificates executed, authenticated and delivered by the Trustee substantially
in the form annexed hereto as Exhibit B-1, subordinate to the Class A
Certificates, Class M Certificates, Class B-1 Certificates and Class B-2
Certificates with respect to distributions and the allocation of Realized Losses
as set forth in Section 4.04 and evidencing an interest designated as a "regular
interest" in REMIC II for purposes of the REMIC Provisions.
"Class B-3 Percentage": With respect to any
Distribution Date, the lesser of 100% and a fraction, expressed as a percentage,
the numerator of which is the aggregate Certificate Principal Balance of the
Class B-3 Certificates immediately prior to such Distribution Date and the
denominator of which is the aggregate Stated Principal Balance of all of the
Mortgage Loans (and related REO Properties) immediately prior to such
Distribution Date.
"Class B-3 Prepayment Distribution Trigger": With
respect to any Distribution Date, a test that shall be satisfied if the fraction
(expressed as a percentage) equal to the aggregate Certificate Principal Balance
of the Class B-3 Certificates immediately prior to such Distribution Date
divided by the aggregate Stated Principal Balance of all of the Mortgage Loans
(or related REO Properties) immediately prior to such Distribution Date is
greater than or equal to 0.60%.
-10-
"Class M Certificate": Any one of the Class M-1
Certificates, Class M-2 Certificates or Class M-3 Certificates executed,
authenticated and delivered by the Trustee substantially in the form annexed
hereto as Exhibit B and evidencing an interest designated as a "regular
interest" in REMIC II for purposes of the REMIC Provisions.
"Class M Percentage": The Class M-1 Percentage, Class
M-2 Percentage and Class M-3 Percentage.
"Class M-1 Percentage": With respect to any
Distribution Date, the lesser of 100% and a fraction, expressed as a percentage,
the numerator of which is the aggregate Certificate Principal Balance of the
Class M-1 Certificates immediately prior to such date and the denominator of
which is the aggregate Stated Principal Balance of all of the Mortgage Loans (or
related REO Properties) immediately prior to such Distribution Date.
"Class M-2 Percentage": With respect to any
Distribution Date, the lesser of 100% and a fraction, expressed as a percentage,
the numerator of which is the aggregate Certificate Principal Balance of the
Class M-2 Certificates immediately prior to such date and the denominator of
which is the aggregate Stated Principal Balance of all of the Mortgage Loans (or
related REO Properties) immediately prior to such Distribution Date.
"Class M-2 Prepayment Distribution Trigger": With
respect to any Distribution Date, a test that shall be satisfied if the fraction
(expressed as a percentage) equal to the sum of the Certificate Principal
Balances of the Class M-2 Certificates, Class M-3 Certificates, Class B-1
Certificates, Class B-2 Certificates and Class B-3 Certificates immediately
prior to such Distribution Date divided by the aggregate Stated Principal
Balance of all of the Mortgage Loans (or related REO Properties) immediately
prior to such Distribution Date is greater than or equal to 4.50%.
"Class M-3 Percentage": With respect to any
Distribution Date, the lesser of 100% and a fraction, expressed as a percentage,
the numerator of which is the aggregate Certificate Principal Balance of the
Class M-3 Certificates immediately prior to such date and the denominator of
which is the aggregate Stated Principal Balance of all of the Mortgage Loans (or
related REO Properties) immediately prior to such Distribution Date.
"Class M-3 Prepayment Distribution Trigger": With
respect to any Distribution Date, a test that shall be satisfied if the fraction
(expressed as a percentage) equal to the sum of the Certificate Principal
Balances of the Class M-3 Certificates, Class B-1 Certificates, Class B-2
Certificates and Class B-3 Certificates immediately prior to such Distribution
Date divided by the aggregate Stated Principal Balance of all of the Mortgage
Loans (and related REO Properties) immediately prior to such Distribution Date
is greater than or equal to 3.25%.
-11-
"Class R Certificate": Any one of the Class R-I
Certificates or Class R-II Certificates.
"Class R-I Certificate": Any one of the Class R-I
Certificates executed by the Trustee and authenticated by the Certificate
Registrar substantially in the form annexed hereto as Exhibit B-2 and evidencing
an interest designated as a "residual interest" in REMIC I for purposes of the
REMIC Provisions.
"Class R-II Certificate": Any one of the Class R-II
Certificates executed by the Trustee and authenticated by the Certificate
Registrar substantially in the form annexed hereto as Exhibit B-2 and evidencing
an interest designated as a "residual interest" in REMIC II for purposes of the
REMIC Provisions.
"Closing Date": June 29, 1998.
"CMAC": Commonwealth Mortgage Assurance Company, or its
successors or assigns.
"CMAC Insured Loans": The Mortgage Loans included in
the Trust Fund covered by the CMAC PMI Policy, as indicated on the Mortgage Loan
Schedule.
"CMAC PMI Policy": The modified primary insurance pool
policy issued with respect to certain of the Mortgage Loans by CMAC.
"CMAC PMI Policy Rate": With respect to any CMAC
Insured Loan, the rate per annum at which the related premium on the CMAC PMI
Policy accrues.
"Code": The Internal Revenue Code of 1986, as amended.
"Collateral Value": The appraised value of a Mortgaged
Property based upon the lesser of (i) the appraisal (as reviewed and approved by
the Seller) made at the time of the origination of the related Mortgage Loan, or
(ii) the sales price of such Mortgaged Property at such time of origination.
With respect to a Mortgage Loan the proceeds of which were used to refinance an
existing mortgage loan, the appraised value of the Mortgaged Property based upon
the appraisal (as reviewed and approved by the Seller) obtained at the time of
refinancing.
"Compensating Interest": With respect to any
Distribution Date, an amount equal to Prepayment Interest Shortfalls resulting
from Principal Prepayments during the related Prepayment Period, but not more
than one-twelfth of 0.125% of the Stated Principal Balance of the Mortgage Loans
immediately preceding such Distribution Date.
-12-
"Corporate Trust Office": The principal corporate trust
office of the Trustee at which at any particular time its corporate trust
business related to this Agreement shall be administered, which office at the
date of the execution of this Agreement is located at ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Impac Secured Assets Corp. Series 1998- 2.
"Credit Support Depletion Date": The first Distribution
Date on which the Senior Percentage equals 100%.
"Curtailment": Any Principal Prepayment made by a
Mortgagor which is not a Principal Prepayment in Full.
"Custodial Account": The custodial account or accounts
created and maintained pursuant to Section 3.10 in the name of a depository
institution, as custodian for the holders of the Certificates, for the holders
of certain other interests in mortgage loans serviced or sold by the Master
Servicer and for the Master Servicer, into which the amounts set forth in
Section 3.10 shall be deposited directly. Any such account or accounts shall be
an Eligible Account.
"Cut-off Date": June 1, 1998.
"Debt Service Reduction": With respect to any Mortgage
Loan, a reduction in the scheduled Monthly Payment for such Mortgage Loan by a
court of competent jurisdiction in a proceeding under the Bankruptcy Code,
except such a reduction constituting a Deficient Valuation or any reduction that
results in a permanent forgiveness of principal.
"Defaulted Mortgage Loan" means any Mortgage Loan as to
which the Mortgagor has failed to make unexcused three or more consecutive
scheduled Monthly Payments.
"Defaulted Mortgage Loss": With respect to any Mortgage
Loan, any loss that is attributable to the Mortgagor's failure to make any
payment of principal or interest as required under the Mortgage Note, except
that such loss shall not include any Special Hazard Loss, Fraud Loss, Bankruptcy
Loss, Extraordinary Loss or other loss resulting from damage to the related
Mortgaged Property.
"Deficient Valuation": With respect to any Mortgage
Loan, a valuation by a court of competent jurisdiction of the Mortgaged Property
in an amount less than the then outstanding indebtedness under the Mortgage
Loan, or any reduction in the amount of principal to be paid in connection with
any scheduled Monthly Payment that constitutes a
-13-
permanent forgiveness of principal, which valuation or reduction results from a
proceeding under the Bankruptcy Code.
"Definitive Certificate": Any definitive, fully
registered Certificate.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to
be replaced with a Qualified Substitute Mortgage Loan.
"Depositor": Impac Secured Assets Corp., or its
successor in interest.
"Depository" The Depository Trust Company, or any
successor Depository hereafter named. The nominee of the initial Depository for
purposes of registering those Certificates that are to be Book-Entry
Certificates is Cede & Co. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
"Depository Participant": A broker, dealer, bank or
other financial institutions or other Person for whom from time to time a
Depository effects book-entry transfers and pledges of securities deposited with
the Depository.
"Determination Date": The 15th day (or if such 15th day
is not a Business Day, the Business Day immediately preceding such 15th day) of
the month of the related Distribution Date.
"Disqualified Organization": Any organization defined
as a "disqualified organization" under Section 860E(e)(5) of the Code, which
includes any of the following: (i) the United States, any State or political
subdivision thereof, any possession of the United States, or any agency or
instrumentality of any of the foregoing (other than an instrumentality which is
a corporation if all of its activities are subject to tax and, except for the
FHLMC, a majority of its board of directors is not selected by such governmental
unit), (ii) a foreign government, any international organization, or any agency
or instrumentality of any of the foregoing, (iii) any organization (other than
certain farmers' cooperatives described in Section 521 of the Code) which is
exempt from the tax imposed by Chapter 1 of the Code (including the tax imposed
by Section 511 of the Code on unrelated business taxable income), (iv) rural
electric and telephone cooperatives described in Section 1381(a)(2)(C) of the
Code and (v) any other Person so designated by the Trustee based upon an Opinion
of Counsel that the holding of an Ownership Interest in a Class R Certificate by
such Person may cause either REMIC I or REMIC II or any Person having an
Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for
-14-
the Transfer of an Ownership Interest in a Class R Certificate to such Person.
The terms "United States", "State" and "international organization" shall have
the meanings set forth in Section 7701 of the Code or successor provisions.
"Distribution Date": The 25th day of any month, or if
such 25th day is not a Business Day, the Business Day immediately following such
25th day, commencing in July 1998.
"Due Date": The first day of the month of the related
Distribution Date.
"Due Period": With respect to any Distribution Date,
the period commencing on the second day of the month preceding the month of such
Distribution Date (or, with respect to the first Due Period, the day following
the Cut-off Date) and ending on the related Due Date.
"Eligible Account": An account maintained with a
federal or state chartered depository institution (i) the short-term obligations
of which are rated A-1 or better by Standard & Poors and F-1 or better by Fitch
at the time of any deposit therein, or (ii) insured by the FDIC (to the limits
established by such Corporation), the uninsured deposits in which account are
otherwise secured such that, as evidenced by an Opinion of Counsel (obtained by
the Person requesting that the account be held pursuant to this clause (ii))
delivered to the Trustee prior to the establishment of such account, the
Certificateholders will have a claim with respect to the funds in such account
and a perfected first priority security interest against any collateral (which
shall be limited to Permitted Investments, each of which shall mature not later
than the Business Day immediately preceding the Distribution Date next following
the date of investment in such collateral or the Distribution Date if such
Permitted Investment is an obligation of the institution that maintains the
Certificate Account or Custodial Account) securing such funds that is superior
to claims of any other depositors or general creditors of the depository
institution with which such account is maintained or (iii) a trust account or
accounts maintained with a federal or state chartered depository institution or
trust company with trust powers acting in its fiduciary capacity or (iv) an
account or accounts of a depository institution acceptable to the Rating
Agencies (as evidenced in writing by the Rating Agencies that use of any such
account as the Custodial Account or the Certificate Account will not have an
adverse effect on the then-current ratings assigned to the Classes of the
Certificates then rated by the Rating Agencies). Eligible Accounts may bear
interest.
"Event of Default": One or more of the events described
in Section 7.01.
-15-
"Excess Bankruptcy Loss": Any Bankruptcy Loss, or
portion thereof, which exceeds the then applicable Bankruptcy Amount.
"Excess Fraud Loss": Any Fraud Loss, or portion
thereof, which exceeds the then applicable Fraud Loss Amount.
"Excess Proceeds": As defined in Section 3.22.
"Excess Special Hazard Loss": Any Special Hazard Loss,
or portion thereof, that exceeds the then applicable Special Hazard Amount.
"Extraordinary Events": Any of the following conditions
with respect to a Mortgaged Property or Mortgage Loan causing or resulting in a
loss which causes the liquidation of such Mortgage Loan:
(a) losses which are otherwise covered by the fidelity
bond and the errors and omissions insurance policy
maintained pursuant to Section 3.18, but are in excess of
the coverage maintained thereunder;
(b) nuclear reaction or nuclear radiation or
radioactive contamination, all whether controlled or
uncontrolled, or remote or be in whole or in part caused by,
contributed to or aggravated by a peril covered by the
definition of the term "Special Hazard Loss";
(c) hostile or warlike action in time of peace or war,
including action in hindering, combating or defending
against an actual, impending or expected attack;
1. by any government or sovereign power, de jure
or de facto, or by any authority maintaining or using
military, naval or air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power,
authority or forces;
(d) any weapon of war employing atomic fission or
radioactive force whether in time of peace or war; or
-16-
(e) insurrection, rebellion, revolution, civil war,
usurped power or action taken by governmental authority in
hindering, combating or defending against such an
occurrence, seizure or destruction under quarantine or
customs regulations, confiscation by order of any government
or public authority; or risks of contraband or illegal
transportation or trade.
"Extraordinary Losses": Any loss incurred on a Mortgage
Loan caused by or resulting from an Extraordinary Event.
"FDIC": Federal Deposit Insurance Corporation or any
successor.
"Final Disposition": With respect to a defaulted
Mortgage Loan is deemed to have occurred upon a determination by the Master
Servicer that it has received all Insurance Proceeds, Liquidation Proceeds and
other payments or cash recoveries which the Master Servicer reasonably and in
good faith expects to be finally recoverable with respect to such Mortgage Loan.
"FHLMC": Federal Home Loan Mortgage Corporation or any
successor.
"Fitch": Fitch IBCA, Inc. or any successor.
"FNMA": Federal National Mortgage Association or any
successor.
"Fraud Loss Amount": As of any date of determination
after the Cut- off Date, an amount equal to: (Y) prior to the first Anniversary,
an amount equal to 2.00% of the aggregate outstanding principal balance of all
of the Mortgage Loans as of the Cut-off Date minus the aggregate amount of Fraud
Losses allocated solely to one or more specific Classes of Certificates in
accordance with Section 4.04 since the Cut-off Date up to such date of
determination and (Z) from the first to the fifth Anniversary, an amount equal
to the lesser of (a) the Fraud Loss Amount as of the most recent anniversary of
the Cut-off Date and (b) 1.00% of the aggregate outstanding principal balance of
all of the Mortgage Loans as of the most recent Anniversary minus (2) the Fraud
Losses allocated solely to one or more specific Classes of Certificates in
accordance with Section 4.04 since the most recent Anniversary up to such date
of determination. On and after the fifth Anniversary, the Fraud Loss Amount
shall be zero.
The Fraud Loss Amount may be further reduced by the
Master Servicer (including accelerating the manner in which such coverage is
reduced) provided that prior to any such reduction, the Master Servicer shall
(i) obtain written confirmation from each Rating Agency that such reduction
shall not reduce the rating assigned to any Class of Certificates by such Rating
Agency below the lower of the then-current rating or the rating assigned to such
-17-
Certificates as of the Closing Date by such Rating Agency and (ii) provide a
copy of such written confirmation to the Trustee.
"Fraud Losses": Losses on Mortgage Loans as to which
there was fraud in the origination of such Mortgage Loan.
"Funding Date": With respect to each Mortgage Loan, the
date on which funds were advanced by or on behalf of the Seller and interest
began to accrue thereunder.
"Initial Certificate Principal Balance": With respect
to each Class of Regular Certificates, the Certificate Principal Balance of such
Class of Certificates as of the Cut-off Date as set forth in the Preliminary
Statement hereto.
"Initial Notional Amount": With respect to the
Scheduled Interest Only Certificates, the Initial Certificate Principal Balance
of the Class A-1 Certificates as set forth in the Preliminary Statement hereto.
With respect to the Variable Strip Certificates, the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date.
"Insurance Policy": With respect to any Mortgage Loan,
any insurance policy (including the CMAC RMI Policy) which is required to be
maintained from time to time under this Agreement in respect of such Mortgage
Loan.
"Insurance Proceeds": Proceeds paid in respect of the
Mortgage Loans pursuant to any Primary Hazard Insurance Policy, any title
insurance policy or any other insurance policy covering a Mortgage Loan, to the
extent such proceeds are not applied to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the procedures that the
Master Servicer would follow in servicing mortgage loans held for its own
account.
"Interest Only Certificate": Any Scheduled Interest
Only Certificate or Variable Strip Certificate.
"Late Collections": With respect to any Mortgage Loan,
all amounts received during any Due Period, whether as late payments of Monthly
Payments or as Insurance Proceeds, Liquidation Proceeds or otherwise, which
represent late payments or collections of Monthly Payments due but delinquent
for a previous Due Period and not previously recovered.
"Liquidation Proceeds": Amounts (other than Insurance
Proceeds) received by the Master Servicer in connection with the taking of an
entire Mortgaged Property by exercise of the power of eminent domain or
condemnation or in connection with the liquidation
-18-
of a defaulted Mortgage Loan through trustee's sale, foreclosure sale or
otherwise, other than amounts received in respect of any REO Property.
"Loan-to-Value Ratio": As of any date, the fraction,
expressed as a percentage, the numerator of which is the current principal
balance of the related Mortgage Loan at the date of determination and the
denominator of which is the Collateral Value of the related Mortgaged Property.
"Lockout Certificates": Any one of the Class A-10
Certificates executed by the Trustee and authenticated by the Trustee
substantially in the form annexed hereto as Exhibit A and evidencing an interest
designated as a "regular interest" in REMIC II for purposes of the REMIC
Provisions.
"Lockout Percentage" With respect to any Distribution
Date, the percentage indicated below:
DISTRIBUTION DATE LOCKOUT PERCENTAGE
----------------- ------------------
July 1998 through June 2003............. 0%
July 2003 through June 2004............. 30%
July 2004 through June 2005............. 40%
July 2005 through June 2006............. 60%
July 2006 through June 2007............. 80%
July 2007 and thereafter................ 100%
Notwithstanding the foregoing, if the Certificate Principal Balances of the
Class A-1, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and
Class A-9 Certificates have been reduced to zero, the Lockout Percentage will be
equal to 100%.
"Maturity Date": The latest possible maturity date,
solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,
by which (i) the Certificate Principal Balance of each Class of Certificates
(other than the Interest Only Certificates) or (ii) the Notional Amount of the
Interest Only Certificate would be reduced to zero, which is June 25, 2028, the
Distribution Date immediately following the latest scheduled maturity date of
any Mortgage Loan.
"Master Servicer": Impac Funding Corporation, or any
successor master servicer appointed as herein provided.
"Monthly Payment": With respect to any Mortgage Loan,
the scheduled monthly payment of principal and interest on such Mortgage Loan
which is payable by a Mortgagor from time to time under the related Mortgage
Note as originally executed (after
-19-
adjustment, if any, for Principal Prepayments and for Deficient Valuations
occurring prior to such Due Date, and after any adjustment by reason of any
bankruptcy or similar proceeding or any moratorium or similar waiver or grace
period).
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc., or its
successor in interest.
"Mortgage": The mortgage, deed of trust or any other
instrument securing the Mortgage Loan.
"Mortgage File": The mortgage documents listed in
Section 2.01 pertaining to a particular Mortgage Loan and any additional
documents required to be added to the Mortgage File pursuant to this Agreement;
provided, that whenever the term "Mortgage File" is used to refer to documents
actually received by the Trustee, such term shall not be deemed to include such
additional documents required to be added unless they are actually so added.
"Mortgage Loan": Each of the mortgage loans,
transferred and assigned to the Trustee pursuant to Section 2.01 or Section 2.04
and from time to time held in the Trust Fund (including any Qualified Substitute
Mortgage Loans), the Mortgage Loans so transferred, assigned and held being
identified in the Mortgage Loan Schedule. As used herein, the term "Mortgage
Loan" includes the related Mortgage Note and Mortgage.
"Mortgage Loan Accrued Interest": With respect to each
Mortgage Loan and each Due Date, the aggregate amount of interest accrued at the
Mortgage Rate in respect of such Mortgage Loan since the preceding Due Date (or
in the case of the initial Due Date, since the Cut-off Date) to but not
including such Due Date with respect to which the Mortgage Loan Accrued Interest
is being calculated in accordance with the terms of such Mortgage Loan, after
giving effect to any previous Principal Prepayments, Deficient Valuation or Debt
Service Reduction in respect of such Mortgage Loan.
"Mortgage Loan Purchase Agreement": The Mortgage Loan
Purchase Agreement dated as of June 1, 1998, among Impac Funding Corporation, as
seller, Impac Mortgage Holdings, Inc., as guarantor, and the Depositor as
purchaser, and all amendments thereof and supplements thereto.
"Mortgage Loan Schedule": As of any date of
determination, the schedule of Mortgage Loans included in the Trust Fund. The
initial schedule of Mortgage Loans with accompanying information transferred on
the Closing Date to the Trustee as part of the Trust Fund for the Certificates,
attached hereto as Exhibit H (as amended from time to time to reflect the
addition of Qualified Substitute Mortgage Loans) (and, for purposes of the
Trustee pursuant
-20-
to Section 2.02, in computer-readable form as delivered to the Trustee), which
list shall set forth the following information with respect to each Mortgage
Loan:
(i) the loan number and name of the Mortgagor;
(ii) ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ and zip code of
the Mortgaged Property;
(iii) the original term to maturity;
(iv) the original principal balance and the original
Mortgage Rate;
(v) the first payment date;
(vi) the type of Mortgaged Property;
(vii) the Monthly Payment in effect as of the Cut-off
Date;
(viii) the principal balance as of the Cut-off Date;
(ix) the Mortgage Rate as of the Cut-off Date and the
Pool Strip Rate;
(x) the occupancy status;
(xi) the purpose of the Mortgage Loan;
(xii) the Collateral Value of the Mortgaged Property;
(xiii) the original term to maturity;
(xiv) the paid-through date of the Mortgage Loan;
(xv) the Servicing Fee Rate;
(xvi) the Net Mortgage Rate for such Mortgage Loan;
(xvii) the documentation type.
-21-
The Mortgage Loan Schedule may be in the form of more
than one schedule, collectively setting forth all of the information required.
"Mortgage Note": The note or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Rate": With respect to any Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan, as adjusted from
time to time in accordance with the provisions of the Mortgage Note.
"Mortgaged Property": The underlying property securing
a Mortgage Loan.
"Mortgagor": The obligor or obligors on a Mortgage
Note.
"Net Mortgage Rate": With respect to each Mortgage Loan
Due Date, a per annum rate of interest equal to the then-applicable Mortgage
Rate on such Mortgage Loan less the sum of the Servicing Fee Rate and the
Trustee Fee Rate and, with respect to the CMAC Insured Loans, the CMAC PMI
Policy Rate.
"Nonrecoverable Advance": Any Advance previously made
or proposed to be made in respect of a Mortgage Loan which, in the good faith
judgment of the Master Servicer, will not or, in the case of a proposed Advance,
would not be ultimately recover able from related Late Collections, Insurance
Proceeds, Liquidation Proceeds or REO Proceeds. The determination by the Master
Servicer that it has made a Nonrecoverable Advance or that any proposed Advance
would constitute a Nonrecoverable Advance, shall be evidenced by a certificate
of a Servicing Officer delivered to the Depositor and the Trustee.
"Non-United States Person": Any Person other than a
United States Person.
"Notional Amount": With respect to the Variable Strip
Certificates as of any Distribution Date, an amount equal to the aggregate
Stated Principal Balance of the Mortgage Loans immediately prior to such date.
With respect to the Scheduled Interest Only Certificates as of any Distribution
Date, an amount equal to the Certificate Principal Balance of the Class A-1
Certificates immediately prior to such date.
"Officers' Certificate": A certificate signed by the
Chairman of the Board, the Vice Chairman of the Board, the President or a vice
president and by the Treasurer, the Secretary, or one of the assistant
treasurers or assistant secretaries of the Master Servicer or of the
Sub-Servicer and delivered to the Depositor and Trustee.
-22-
"Opinion of Counsel": A written opinion of counsel, who
may be counsel for the Depositor or the Master Servicer, reasonably acceptable
to the Trustee; except that any opinion of counsel relating to (a) the
qualification of any account required to be maintained pursuant to this
Agreement as an Eligible Account, (b) the qualification of REMIC I or REMIC II
as REMICs, (c) compliance with the REMIC Provisions or (d) resignation of the
Master Servicer pursuant to Section 6.04 must be an opinion of counsel who (i)
is in fact independent of the Depositor and the Master Servicer, (ii) does not
have any direct financial interest or any material indirect financial interest
in the Depositor or the Master Servicer or in an affiliate of either and (iii)
is not connected with the Depositor or the Master Servicer as an officer,
employee, director or person performing similar functions.
"Original Senior Percentage": The fraction, expressed
as a percentage, the numerator of which is the aggregate Initial Certificate
Principal Balance of the Class A Certificates and the Class R Certificates and
the denominator of which is the aggregate Stated Principal Balance of the
Mortgage Loans, which is approximately 94.00% as of the Closing Date.
"OTS": Office of Thrift Supervision or any successor.
"Outstanding Mortgage Loan": As to any Due Date, a
Mortgage Loan (including an REO Property) which was not the subject of a
Principal Prepayment in Full, Cash Liquidation or REO Disposition and which was
not purchased prior to such Due Date pursuant to Sections 2.02, 2.04, 3.14 or
3.24.
"Ownership Interest": As to any Certificate, any
ownership or security interest in such Certificate, including any interest in
such Certificate as the Holder thereof and any other interest therein, whether
direct or indirect, legal or beneficial, as owner or as pledgee.
"Pass-Through Rate": A rate equal to, (i) with respect
to all Certificates other than the Variable Strip Certificates, a fixed rate set
forth in the Preliminary Statement hereto, (ii) with respect to the Variable
Strip Certificates the weighted average, expressed as a percentage, of the Pool
Strip Rate on each of the Mortgage Loans as of the Due Date in the month
immediately preceding the month in which such Distribution Date occurs, weighted
on the basis of the respective Stated Principal Balances of the Mortgage Loans,
which Stated Principal Balances shall be the Stated Principal Balances of the
Mortgage Loans at the close of business on the immediately preceding
Distribution Date after giving effect to distributions thereon allocable to
principal (or, in the case of the Pass-Through Rate for the initial Distribution
Date, at the close of business on the Cut-off Date).
-23-
"Percentage Interest": With respect to any Certificate
(other than a Class R Certificate), the undivided percentage ownership interest
in the related Class evidenced by such Certificate, which percentage ownership
interest shall be equal to the Initial Certificate Principal Balance thereof or
Initial Notional Amount (in the case of the Interest Only Certificates) divided
by the aggregate Initial Certificate Principal Balance or initial Notional
Amount, as applicable, of all of the Certificates of the same Class. With
respect to a Class R Certificate, the interest in distributions to be made with
respect to such Class evidenced thereby, expressed as a percentage, as stated on
the face of each such Certificate.
"Permitted Investment": One or more of the following:
(i) obligations of or guaranteed as to principal and
interest by the United States or any agency or
instrumentality thereof when such obligations are backed by
the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in
clause (i) maturing not more than one month from the date of
acquisition thereof, provided that the unsecured obligations
of the party agreeing to repurchase such obligations are at
the time rated by each Rating Agency in its highest
short-term rating available;
(iii) federal funds, certificates of deposit, demand
deposits, time deposits and bankers' acceptances (which
shall each have an original maturity of not more than 90
days and, in the case of bankers' acceptances, shall in no
event have an original maturity of more than 365 days or a
remaining maturity of more than 30 days) denominated in
United States dollars of any U.S. depository institution or
trust company incorporated under the laws of the United
States or any state thereof or of any domestic branch of a
foreign depository institution or trust company; provided
that the debt obligations of such depository institution or
trust company (or, if the only Rating Agency is Standard &
Poor's, in the case of the principal depository institution
in a depository institution holding company, debt
obligations of the depository institution holding company)
at the date of acquisition thereof have been rated by each
Rating Agency in its highest short-term rating available;
and provided further that, if the only Rating Agency is
Standard & Poor's and if the depository or trust company is
a principal subsidiary of a bank holding company and the
debt obligations of such subsidiary are not separately
rated, the applicable rating shall be that of the bank
holding company; and, provided further that, if the original
maturity of such short-term obligations of a domestic branch
of a foreign depository institution or trust company shall
exceed 30 days, the short-term
-24-
rating of such institution shall be A-1+ in the case of
Standard & Poor's if Standard & Poor's is the Rating Agency;
(iv) 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 Fitch in
its highest short-term rating available and by Standard &
Poor's at least A-1; provided that such commercial paper
shall have a remaining maturity of not more than 30 days;
(v) a money market fund or a qualified investment fund
rated by each Rating Agency in its highest long-term rating
available; and
(vi) other obligations or securities that are
acceptable to each Rating Agency as a Permitted Investment
hereunder and will not reduce the rating assigned to any
Class of Certificates by such Rating Agency below the lower
of the then-current rating or the rating assigned to such
Certificates as of the Closing Date by such Rating Agency,
as evidenced in writing;
PROVIDED, HOWEVER, that no instrument shall be a Permitted Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest payments with respect to such instrument provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations.
"Permitted Transferee": Any transferee of a Residual
Certificate other than a Disqualified Organization or a Non-United States
Person.
"Person": Any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Pool Strip Rate": With respect to any Distribution
Date and any Mortgage Loan, the Net Mortgage Rate thereon minus 6.85%, but not
less than 0.00%.
"Prepayment Distribution Percentage": With respect to
any Distribution Date and each Class of Class M Certificates and Class B
Certificates, under the applicable circumstances set forth below, the respective
percentages set forth below:
-25-
(i) For any Distribution Date on which any Class of Class M
or Class B Certificates are outstanding:
(a) in the case of the Class of Class M
Certificates then outstanding with the lowest numerical
designation, or in the event the Class M Certificates
are no longer outstanding, the Class of Class B
Certificates then outstanding with the lowest numerical
designation and each other Class of Class M
Certificates and Class B Certificates for which the
related Prepayment Distribution Trigger has been
satisfied, a fraction, expressed as a percentage, the
numerator of which is the Certificate Principal Balance
of such Class immediately prior to such date and the
denominator of which is the sum of the Certificate
Principal Balances immediately prior to such date of
(1) the Class of Class M Certificates then outstanding
with the lowest numerical designation, or in the event
the Class M Certificates are no longer outstanding, the
Class of Class B Certificates then outstanding with the
lowest numerical designation and (2) all other Classes
of Class M Certificates and Class B Certificates for
which the respective Prepayment Distribution Triggers
have been satisfied; and
(b) in the case of each other Class of Class M
Certificates and Class B Certificates for which the
Prepayment Distribution Triggers have not been
satisfied, 0%; and
(ii) Notwithstanding the foregoing, if the application
of the foregoing percentages on any Distribution Date as
provided in Section 4.01 (determined without regard to the
proviso to the definition of "Subordinate Principal
Distribution Amount") would result in a distribution in
respect of principal of any Class or Classes of Class M
Certificates and Class B Certificates in an amount greater
than the remaining Certificate Principal Balance thereof
(any such class, a "Maturing Class"), then: (a) the
Prepayment Distribution Percentage of each Maturing Class
shall be reduced to a level that, when applied as described
above, would exactly reduce the Certificate Principal
Balance of such Class to zero; (b) the Prepayment
Distribution Percentage of each other Class of Class M
Certificates and Class B Certificates (any such Class, a
"Non-Maturing Class") shall be recalculated in accordance
with the provisions in paragraph (i) above, as if the
Certificate Principal Balance of each Maturing Class had
been reduced to zero (such percentage as recalculated, the
"Recalculated Percentage"); (c) the total amount of the
reductions in the Prepayment
-26-
Distribution Percentages of the Maturing Class or Classes
pursuant to clause (a) of this sentence, expressed as an
aggregate percentage, shall be allocated among the
Non-Maturing Classes in proportion to their respective
Recalculated Percentages (the portion of such aggregate
reduction so allocated to any Non-Maturing Class, the
"Adjustment Percentage"); and (d) for purposes of such
Distribution Date, the Prepayment Distribution Percentage of
each Non-Maturing Class shall be equal to the sum of (1) the
Prepayment Distribution Percentage thereof, calculated in
accordance with the provisions in paragraph (i) above as if
the Certificate Principal Balance of each Maturing Class had
not been reduced to zero, plus (2) the related Adjustment
Percentage.
"Prepayment Distribution Trigger": The Class M-2
Prepayment Distribution Trigger, Class M-3 Prepayment Distribution Trigger,
Class B-1 Prepayment Distribution Trigger, Class B-2 Prepayment Distribution
Trigger or Class B-3 Prepayment Distribution Trigger.
"Prepayment Interest Shortfall": As to any Distribution
Date and any Mortgage Loan (other than a Mortgage Loan relating to an REO
Property) that was the subject of (a) a Principal Prepayment in Full during the
related Prepayment Period, an amount equal to the excess of one month's interest
at the Net Mortgage Rate on the Stated Principal Balance of such Mortgage Loan
over the amount of interest (adjusted to the Net Mortgage Rate) paid by the
Mortgagor for such Prepayment Period to the date of such Principal Prepayment in
Full or (b) a Curtailment during the prior calendar month, an amount equal to
one month's interest at the Net Mortgage Rate on the amount of such Curtailment.
"Prepayment Period": As to any Distribution Date, the
calendar month preceding the month in which such Distribution Date occurs.
"Primary Hazard Insurance Policy": Each primary hazard
insurance policy required to be maintained pursuant to Section 3.13.
"Primary Insurance Policy": Any primary policy of
mortgage guaranty insurance other than the CMAC PMI Policy, or any replacement
policy therefor providing coverage for certain Mortgage Loans included in the
Trust Fund with Loan-to-Value Ratios in excess of 80.00%.
"Principal Prepayment": Any payment of principal made
by the Mortgagor on a Mortgage Loan which is received in advance of its
scheduled Due Date and which is not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.
-27-
"Principal Prepayment in Full": Any Principal
Prepayment made by a Mortgagor of the entire Principal Balance of the Mortgage
Loan.
"Purchase Price": With respect to any Mortgage Loan (or
REO Property) required to be purchased pursuant to Section 2.02, 2.04 or 3.14 or
that the Master Servicer is entitled to repurchase pursuant to Section 3.24, an
amount equal to the sum of (i) 100% of the Stated Principal Balance thereof,
(ii) unpaid accrued interest (or REO Imputed Interest) at the applicable Net
Mortgage Rate on the Stated Principal Balance thereof outstanding during each
Due Period that such interest was not paid or advanced, from the date through
which interest was last paid by the Mortgagor or advanced and distributed to
Certificateholders together with unpaid Servicing Fees from the date through
which interest was last paid by the Mortgagor, in each case to the first day of
the month in which such Purchase Price is to be distributed, plus (iii) the
aggregate of all Advances made in respect thereof that were not previously
reimbursed.
"Qualified Insurer": Any insurance company duly
qualified as such under the laws of the state or states in which the related
Mortgaged Property or Mortgaged Properties is or are located, duly authorized
and licensed in such state or states to transact the type of insurance business
in which it is engaged and approved as an insurer by the Master Servicer, so
long as the claims paying ability of which is acceptable to the Rating Agencies
for pass-through certificates having the same rating as the Certificates rated
by the Rating Agencies as of the Closing Date.
"Qualified Substitute Mortgage Loan": A Mortgage Loan
substituted by the Depositor for a Deleted Mortgage Loan which must, on the date
of such substitution, as confirmed in an Officers' Certificate delivered to the
Trustee, (i) have an outstanding principal balance, after deduction of the
principal portion of the monthly payment due in the month of substitution (or in
the case of a substitution of more than one Mortgage Loan for a Deleted Mortgage
Loan, an aggregate outstanding principal balance, after such deduction), not in
excess of the Stated Principal Balance of the Deleted Mortgage Loan (the amount
of any shortfall to be paid to the Master Servicer for deposit in the Custodial
Account in the month of substitution); (ii) have a Mortgage Rate and a Net
Mortgage Rate no lower than and not more than 1% per annum higher than the
Mortgage Rate and Net Mortgage Rate, respectively, of the Deleted Mortgage Loan
as of the date of substitution; (iii) have a Loan-to-Value Ratio at the time of
substitution no higher than that of the Deleted Mortgage Loan at the time of
substitution; (iv) have a remaining term to stated maturity not greater than
(and not more than one year less than) that of the Deleted Mortgage Loan; (v)
comply with each representation and warranty set forth in Section 2.04 hereof;
(vi) have a Pool Strip Rate equal to or greater than that of the Deleted
Mortgage Loan. Notwithstanding any other provisions herein; (vii) in the event
that the "Pool Strip Rate" of any Qualified Substitute Mortgage Loan as
calculated pursuant to the definition of "Pool Strip Rate" is greater than the
Pool Strip Rate of the related Deleted Mortgage Loan the excess of the Pool
Strip Rate on such Qualified Substitute Mortgage Loan as calculated pursuant to
the definition of
-28-
"Pool Strip Rate" over the Pool Strip Rate on the related Deleted Mortgage Loan
shall be payable to the Class R Certificates pursuant to Section 4.01 hereof
and, (viii) comply with each representation and warranty set forth in the
Mortgage Loan Purchase Agreement.
"Rating Agency": and Standard & Poor's or each of their
successors. If such agencies and their successors are no longer in existence,
"Rating Agency" shall be such nationally recognized statistical rating agency,
or other comparable Person, designated by the Depositor, notice of which
designation shall be given to the Trustee and Master Servicer. References herein
to the two highest long term debt rating categories of a Rating Agency shall
mean "AA" or better in the case of Fitch, and "AA" or better in the case of
Standard & Poor's and references herein to the highest short-term debt rating of
a Rating Agency shall mean "A-1+" in the case of Standard & Poor's, and "F-1" in
the case of Fitch, and in the case of any other Rating Agency such references
shall mean such rating categories without regard to any plus or minus.
"Realized Loss": With respect to each Mortgage Loan or
REO Property as to which a Cash Liquidation or REO Disposition has occurred, an
amount (not less than zero) equal to (i) the Stated Principal Balance of the
Mortgage Loan as of the date of Cash Liquidation or REO Disposition, plus (ii)
interest (and REO Imputed Interest, if any) at the Net Mortgage Rate from the
Due Date as to which interest was last paid or advanced to Certificateholders up
to the date of the Cash Liquidation or REO Disposition on the Stated Principal
Balance of such Mortgage Loan outstanding during each Due Period that such
interest was not paid or advanced, minus (iii) the proceeds, if any, received
during the month in which such Cash Liquidation or REO Disposition occurred, to
the extent applied as recoveries of interest at the Net Mortgage Rate and to
principal of the Mortgage Loan, net of the portion thereof reimbursable to the
Master Servicer or any Sub-Servicer with respect to related Advances not
previously reimbursed. With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient Valuation
and the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.
"Record Date": The last Business Day of the month
immediately preceding the month of the related Distribution Date.
"Regular Certificate": Any of the Certificates other
than a Residual Certificate.
"Relief Act": The Soldiers' and Sailors' Civil Relief
Act of 1940, as amended.
"REMIC": A "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code.
-29-
"REMIC I": The segregated pool of assets, with respect
to which a REMIC election is to be made, consisting of: (i) each Mortgage Loan
(exclusive of payments of principal and interest due on or before the Cut-off
Date, if any, received by the Master Servicer which shall not constitute an
asset of the Trust Fund) as from time to time are subject to this Agreement and
all payments under and proceeds of such Mortgage Loans (exclusive of any
prepayment fees and late payment charges received on the Mortgage Loans),
together with all documents included in the related Mortgage File, subject to
Section 2.01; (ii) such funds or assets as from time to time are deposited in
the Custodial Account or the Certificate Account and belonging to the Trust
Fund; (iii) any REO Property; (iv) the Primary Hazard Insurance Policies, if
any, the Primary Insurance Policies, if any, and all other Insurance Policies
with respect to the Mortgage Loans; and (v) the Depositor's interest in respect
of the representations and warranties made by the Seller in the Mortgage Loan
Purchase Agreement as assigned to the Trustee pursuant to Section 2.04 hereof.
"REMIC I Certificates": The Class R-I Certificates.
"REMIC II": The segregated pool of assets consisting of
the Uncertificated REMIC I Regular Interests conveyed in trust to the Trustee
for the benefit of the holders of the Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class
A-11, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2, Class B-3 and Class
R-II Certificates pursuant to Section 2.06, with respect to which a separate
REMIC election is to be made.
"REMIC II Certificates": Any of the Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class
A-9, Class A-10, Class A-11, Class M-1, Class M-2, Class M-3, Class B-1, Class
B-2, Class B-3 and Class R-II Certificates.
"REMIC Provisions": Provisions of the federal income
tax law relating to real estate mortgage investment conduits, which appear at
Sections 860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and proposed, temporary and final regulations and published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
"Remittance Report": A report prepared by the Master
Servicer providing the information set forth in Exhibit E attached hereto.
"REO Acquisition": The acquisition by the Master
Servicer on behalf of the Trustee for the benefit of the Certificateholders of
any REO Property pursuant to Section 3.15.
-30-
"REO Disposition": The receipt by the Master Servicer
of Insurance Proceeds, Liquidation Proceeds and other payments and recoveries
(including proceeds of a final sale) which the Master Servicer expects to be
finally recoverable from the sale or other disposition of the REO Property.
"REO Imputed Interest": As to any REO Property, for any
period, an amount equivalent to interest (at the Mortgage Rate that would have
been applicable to the related Mortgage Loan had it been outstanding) on the
unpaid principal balance of the Mortgage Loan as of the date of acquisition
thereof (as such balance is reduced pursuant to Section 3.15 by any income from
the REO Property treated as a recovery of principal).
"REO Proceeds": Proceeds, net of directly related
expenses, received in respect of any REO Property (including, without
limitation, proceeds from the rental of the related Mortgaged Property and of
any REO Disposition), which proceeds are required to be deposited into the
Custodial Account as and when received.
"REO Property": A Mortgaged Property acquired by the
Master Servicer on behalf of the Trust Fund through foreclosure or deed-in-lieu
of foreclosure in connection with a defaulted Mortgage Loan.
"Request for Release": A release signed by a Servicing
Officer, in the form of Exhibits F-1 or F-2 attached hereto.
"Residual Certificate": Any of the Class R-I
Certificates or Class R- II Certificates.
"Responsible Officer": When used with respect to the
Trustee, the Chairman or Vice Chairman of the Board of Directors or Trustees,
the Chairman or Vice Chairman of the Executive or Standing Committee of the
Board of Directors or Trustees, the President, the Chairman of the Committee on
Trust Matters, any vice president, any assistant vice president, the Secretary,
any assistant secretary, the Treasurer, any assistant treasurer, the Cashier,
any assistant cashier, any trust officer or assistant trust officer, the
Controller and any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
"Scheduled Accrual Certificate": Any one of the Class
A-3 Certificates.
-31-
"Scheduled Interest Only Certificate": Any one of the
Class A-2 Certificates.
"Scheduled Principal Balance": With respect to the
Class A-1 Certificates and Class A-3 Certificates and each Distribution Date,
the amount set forth for such certificate on such Distribution Date in Exhibit L
hereto.
"Seller": Impac Funding Corporation, or its successor
in interest.
"Senior Accelerated Distribution Percentage": With
respect to any Distribution Date, the percentage indicated below:
Senior Accelerated
DISTRIBUTION DATE DISTRIBUTION PERCENTAGE
------------------------------------------------
July 1998 through 100%
June 2003
July 2003 through Senior Percentage, plus 70% of
June 2004 the Subordinate Percentage
July 2004 through Senior Percentage, plus 60% of
June 2005 the Subordinate Percentage
July 2005 through Senior Percentage, plus 40% of
June 2006 the Subordinate Percentage
July 2006 through Senior Percentage, plus 20% of
June 2007 the Subordinate Percentage
July 2007 and Senior Percentage,
thereafter
provided, however, (i) that any scheduled reduction to the Senior Accelerated
Distribution Percentage described above shall not occur as of any Distribution
Date unless either (a)(1)(x) the outstanding principal balance of Mortgage Loans
delinquent 60 days or more (including foreclosure and REO Property) averaged
over the last six months as a percentage of the aggregate outstanding
Certificate Principal Balance of the Class M Certificates and the Class B
Certificates, is less than 50%, or (y) the outstanding principal balance of
Mortgage Loans delinquent 60 days or more (including foreclosure and REO
Property) averaged over the last six months, as a percentage of the aggregate
outstanding principal balance of all Mortgage Loans averaged over
-32-
the last six months, does not exceed 2% and (2) Realized Losses on the Mortgage
Loans to date for such Distribution Date if occurring during the sixth, seventh,
eighth, ninth or tenth year (or any year thereafter) after the Closing Date are
less than 30%, 35%, 40%, 45% or 50%, respectively, of the sum of the Initial
Certificate Principal Balances of the Class M Certificates and Class B
Certificates or (b) (1) the aggregate outstanding principal balance of the
Mortgage Loans delinquent 60 days or more (including foreclosure and REO
Property) averaged over the last six months, as a percentage of the aggregate
outstanding principal balance of all Mortgage Loans averaged over the last six
months, does not exceed 4% and (2) Realized Losses on the Mortgage Loans on or
prior to such Distribution Date are less than 10% of the sum of the Initial
Certificate Principal Balances of the Class M Certificates and Class B
Certificates and (ii) that for any Distribution Date on which the Senior
Percentage is greater than the Original Senior Percentage, the Senior
Accelerated Distribution Percentage for such Distribution Date shall be 100%.
Notwithstanding the foregoing, upon the reduction of the aggregate Certificate
Principal Balance of the Class A Certificates and the Class R Certificates to
zero, the Senior Accelerated Distribution Percentage will equal 0%.
"Senior Interest Distribution Amount": As defined in
Section 4.01(c)(i).
"Senior Percentage": As of any Distribution Date, the
lesser of 100% and a fraction, expressed as a percentage, the numerator of which
is the aggregate Certificate Principal Balance of the Class A Certificates
(other than the Interest Only Certificates) and Class R Certificates immediately
prior to such Distribution Date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans or related REO Properties
immediately prior to such Distribution Date.
"Senior Principal Distribution Amount": As to any
Distribution Date, the lesser of (a) the balance of the Available Distribution
Amount remaining after the distribution of all amounts required to be
distributed pursuant to Section 4.01(c)(i) and (ii) and (b) the sum of the
amounts required to be distributed to the Class A Certificates and Class R
Certificates on such Distribution Date pursuant to Section 4.01(c)(ii), (xv) and
(xvi).
"Servicing Account": The account or accounts created
and maintained pursuant to Section 3.09.
"Servicing Advances": All customary, reasonable and
necessary "out of pocket" costs and expenses incurred in connection with a
default, delinquency or other unanticipated event in the performance by the
Master Servicer of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the
-33-
management and liquidation of any REO Property and (iv) compliance with the
obligations under the second paragraph of Section 3.01 and Section 3.09.
"Servicing Fees": As to each Mortgage Loan, an amount,
payable out of any payment of interest on the Mortgage Loan, equal to interest
at the Servicing Fee Rate on the Stated Principal Balance of such Mortgage Loan
for the calendar month preceding the month in which the payment is due
(alternatively, in the event such payment of interest accom panies a Principal
Prepayment in full made by the Mortgagor, interest for the number of days
covered by such payment of interest).
"Servicing Fee Rate": With respect to each Mortgage
Loan, the per annum rate of 0.25%.
"Servicing Officer": Any officer of the Master Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans, whose name and specimen signature appear on a list of servicing
officers furnished to the Trustee by the Master Servicer, as such list may from
time to time be amended.
"Single Certificate": A Certificate of any Class
evidencing an Initial Certificate Principal Balance of $1,000.
"SPA": The Standard Prepayment Assumption.
"Special Hazard Amount": As of any Distribution Date, an amount
equal to $1,774,883 (the initial "Special Hazard Amount") minus the sum of (i)
the aggregate amount of Special Hazard Losses allocated solely to one or more
Classes of Certificates in accordance with Section 4.04 and (ii) the Adjustment
Amount (as defined below) as most recently calculated. For each Anniversary, the
Adjustment Amount shall be calculated and shall be equal to the amount, if any,
by which the amount calculated in accordance with the preceding sentence
(without giving effect to the deduction of the Adjustment Amount for such
Anniversary) exceeds the greatest of (i) twice the outstanding principal balance
of the Mortgage Loan in the Trust Fund which has the largest outstanding
principal balance on the Distribution Date immediately preceding such
anniversary, (ii) the product of 1.00% multiplied by the outstanding principal
balance of all Mortgage Loans on the Distribution Date immediately preceding
such anniversary and (iii) the aggregate outstanding principal balance (as of
the immediately preceding Distribution Date) of the Mortgage Loans in any single
five-digit California zip code area with the largest amount of Mortgage Loans by
aggregate principal balance as of such anniversary and (B) the greater of (i)
the product of 0.50% multiplied by the outstanding principal balance of all
Mortgage Loans on the Distribution Date immediately preceding such anniversary
multiplied by a fraction, the numerator of which is equal to the aggregate
outstanding principal balance (as of the immediately preceding Distribution
Date) of all of the Mortgage Loans secured by Mortgaged Properties
-34-
located in the State of California divided by the aggregate outstanding
principal balance (as of the immediately preceding Distribution Date) of all of
the Mortgage Loans, expressed as a percentage, and the denominator of which is
equal to 61.68% (which percentage is equal to the percentage of Mortgage Loans
initially secured by Mortgaged Properties located in the State of California)
and (ii) the aggregate outstanding principal balance (as of the immediately
preceding Distribution Date) of the largest Mortgage Loan secured by a Mortgaged
Property located in the State of California.
The Special Hazard Amount may be further reduced by the
Master Servicer (including accelerating the manner in which coverage is reduced)
provided that prior to any such reduction, the Master Servicer shall (i) obtain
written confirmation from each Rating Agency that such reduction shall not
reduce the rating assigned to any Class of Certificates by such Rating Agency
below the lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date by such Rating Agency and (ii) provide a
copy of such written confirmation to the Trustee.
"Special Hazard Loss": Any Realized Loss not in excess
of the cost of the lesser of repair or replacement of a Mortgaged Property
suffered by such Mortgaged Property on account of direct physical loss,
exclusive of (i) any loss of a type covered by a hazard policy or a flood
insurance policy required to be maintained in respect of such Mortgaged Property
pursuant to Section 3.12(a), except to the extent of the portion of such loss
not covered as a result of any coinsurance provision and (ii) any Extraordinary
Loss.
"Special Hazard Percentage": As of each Anniversary,
the greater of (i) 1.00% and (ii) the largest percentage obtained by dividing
the aggregate outstanding principal balance (as of the immediately preceding
Distribution Date) of the Mortgage Loans secured by Mortgaged Properties located
in a single, five-digit zip code area in the State of California by the
outstanding principal balance of all the Mortgage Loans as of such immediately
preceding Distribution Date.
"Standard & Poor's": Standard & Poor's, a division of
The McGraw Hill Companies, Inc., or its successor in interest.
"Standard Prepayment Assumption": represents an assumed
rate of prepayment each month relative to the then outstanding principal balance
of a pool of new mortgage loans. A prepayment assumption of 100% SPA assumes
constant prepayment rates of 0.20% per annum of the then outstanding principal
balance of such mortgage loans in the first month of the life of the mortgage
loans and an additional 0.20% per annum in each month thereafter until the 30th
month. Beginning in the 30th month and in each month thereafter during the life
of the mortgage loans, 100% SPA assumes a constant prepayment rate of 6% per
annum each month.
-35-
"Startup Day": The day designated as such pursuant to
Article X hereof.
"Stated Principal Balance": With respect to any
Mortgage Loan or related REO Property at any given time, (i) the principal
balance of the Mortgage Loan outstanding as of the Cut-off Date, after
application of principal payments due on or before such date, whether or not
received, minus (ii) the sum of (a) the principal portion of the Monthly
Payments due with respect to such Mortgage Loan or REO Property during each Due
Period ending prior to the most recent Distribution Date which were received or
with respect to which an Advance was made, and (b) all Principal Prepayments
with respect to such Mortgage Loan or REO Property, and all Insurance Proceeds,
Liquidation Proceeds and net income from a REO Property to the extent applied by
the Master Servicer as recoveries of principal in accordance with Section 3.15
with respect to such Mortgage Loan or REO Property, which were distributed
pursuant to Section 4.01 on any previous Distribution Date, and (c) any Realized
Loss with respect thereto allocated pursuant to Section 4.04 for any previous
Distribution Date.
"Subordinate Certificate": Any of the Class M, Class
B-1, Class B-2 or Class B-3 Certificates.
"Subordinate Percentage": As of any date of
determination, a percentage equal to 100% minus Senior Percentage as of such
date.
"Subordinate Principal Distribution Amount": With
respect to any Distribution Date and each Class of Class M Certificates and
Class B Certificates, (a) the sum of (i) the product of (x) the related Class M
Percentage or Class B Percentage for such Class and (y) the aggregate of the
amounts calculated for such Distribution Date under clauses (1), (2) and (3) of
Section 4.01(c)(ii)(A) without giving effect to the Senior Percentage; (ii) such
Class's pro rata share, based on the Certificate Principal Balance of each Class
of Class M Certificates and Class B Certificates then outstanding, of the
principal collections described in Section 4.01(c)(ii)(B)(b) to the extent such
collections are not otherwise distributed to the Senior Certificates; (iii) the
product of (x) the related Prepayment Distribution Percentage and (y) the
aggregate of all Principal Prepayments in Full and Curtailments received in the
related Prepayment Period to the extent not payable to the Senior Certificates;
and (iv) any amounts described in clauses (i), (ii) and (iii) as determined for
any previous Distribution Date, that remain undistributed to the extent that
such amounts are not attributable to Realized Losses which have been allocated
to a subordinate Class of Class M or Class B Certificates; PROVIDED, HOWEVER,
that such amount shall in no event exceed the outstanding Certificate Principal
Balance of such Class of Certificates immediately prior to such date.
-36-
"Sub-Servicer": Any Person with which the Master
Servicer has entered into a Sub-Servicing Agreement and which meets the
qualifications of a Sub-Servicer pursuant to Section 3.02.
"Sub-Servicer Remittance Date": The 18th day of each
month, or if such day is not a Business Day, the immediately preceding Business
Day.
"Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements set forth in Section 3.08 and is
otherwise acceptable to the Master Servicer.
"Sub-Servicing Agreement": The written contract between
the Master Servicer and a Sub-Servicer and any successor Sub-Servicer relating
to servicing and administration of certain Mortgage Loans as provided in Section
3.02.
"TAC Certificates": Any one of the Class A-6
Certificates, Class A-7 Certificates, and Class A-8 Certificates.
"Targeted Principal Balance": With respect to the Class
A-6 Certificates, Class A-7 Certificates and Class A-8 Certificates and each
Distribution Date, the amount set forth for such certificate on such
Distribution Date in Exhibit L hereto.
"Tax Returns": The federal income tax return on
Internal Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit
Income Tax Return, including Schedule Q thereto, Quarterly Notice to Residual
Interest Holders of REMIC Taxable Income or Net Loss Allocation, or any
successor forms, to be filed on behalf of REMIC I and REMIC II due to their
classification as a REMIC under the REMIC Provisions, together with any and all
other information, reports or returns that may be required to be furnished to
the Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.
"Transfer": Any direct or indirect transfer, sale,
pledge, hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
"Transferor": Any Person who is disposing by Transfer
of any Ownership Interest in a Certificate.
"Trust Fund": REMIC I and REMIC II.
"Trustee": Bankers Trust Company of California, N.A.,
or its successor in interest, or any successor trustee appointed as herein
provided.
-37-
"Trustee's Fee": As to each Mortgage Loan and
Distribution Date, an amount, payable out of any payment or advance of interest
on the Mortgage Loan, equal to interest at the Trustee Fee Rate on the Stated
Principal Balance of such Mortgage Loan as of the Due Date immediately preceding
the month in which such Distribution Date occurs.
"Trustee Fee Rate": With respect to each Mortgage Loan,
the per annum rate of 0.0125%.
"Uncertificated Principal Balance": With respect to
each Uncertificated REMIC I Regular Interest on any date of determination, an
amount equal to (i) $83,469,712.51 with respect to Uncertificated REMIC I
Regular Interest X and an amount equal to $41,883,993.00 with respect to
Uncertificated REMIC I Regular Interest Y minus (ii) the sum of (x) the
aggregate of all amounts previously deemed distributed with respect to such
interest and applied to reduce the Uncertificated Principal Balance thereof
pursuant to Section 4.07(a)(ii) and (y) the aggregate of all reductions in
Certificate Principal Balance deemed to have occurred in connection with
Realized Losses that were previously deemed allocated to the Uncertificated
Principal Balance of such Uncertificated REMIC I Regular Interest pursuant to
Section 4.07(d).
"Uncertificated REMIC I Accrued Interest": With respect
to each Distribution Date, (i) as to Uncertificated REMIC I Regular Interest X,
an amount equal to the aggregate amount of Accrued Certificate Interest that
would result under the terms of the definition thereof on the Class ▇-▇, ▇▇▇▇▇
▇-▇, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class
M-1, Class M-2, Class M-3, Class B-1, Class B-2, Class B-3 and Class R-II
Certificates if the Pass-Through Rate on such Classes were equal to the
Uncertificated REMIC I Pass-Through Rate on Uncertificated REMIC I Regular
Interest X, (ii) as to Uncertificated REMIC I Regular Interest Y, an amount
equal to the aggregate amount of Accrued Certificate Interest that would result
under the terms of the definition thereof on the Class A-1 Certificates if the
Pass-Through Rate on such Classes were equal to the Uncertificated REMIC I
Pass-Through Rate on Uncertificated REMIC I Regular Interest Y and (iii) as to
each Uncertificated REMIC I IO Regular Interest, an amount equal to the
aggregate amount of Accrued Certificate Interest that would result under the
terms of the definition thereof on each such uncertificated interest, if the
Pass-Through Rate on such uncertificated interest was equal to the related
Uncertificated REMIC I Pass-Through Rate and the notional amount of such
uncertificated interest was equal to the related Uncertificated REMIC I IO
Notional Amount; provided, that any reduction in the amount of Accrued
Certificate Interest resulting from the allocation of Prepayment Interest
Shortfalls, Realized Losses or other amounts to the Class A-11
Certificateholders pursuant to Sections 4.04 hereof shall be allocated to the
Uncertificated REMIC I IO Regular Interests pro rata in accordance with the
amount of interest accrued with respect to each related Uncertificated REMIC I
IO Notional Amount and such Distribution Date.
-38-
"Uncertificated REMIC I IO Notional Amount": The sum of
the aggregate Stated Principal Balance of the Mortgage Loans.
"Uncertificated REMIC I IO Regular Interest": An
uncertificated partial undivided beneficial ownership interest in REMIC I, no
principal balance, and bearing interest at the respective Uncertificated REMIC I
Pass-Through Rate on the Uncertificated REMIC I IO Notional Amount.
"Uncertificated REMIC I Pass-Through Rate": With
respect to each of the Uncertificated REMIC I Regular Interests X and Y 6.85%
and 6.85%, respectively. With respect to the Uncertificated REMIC I IO Regular
Interest, an amount equal to the sum of the Pool Strip Rates.
"Uncertificated REMIC I Regular Interest X": An
uncertificated partial undivided beneficial ownership interest in REMIC I having
a principal balance equal to the Stated Principal Balance of the Mortgage Loans
and REO Property from time to time multiplied by a fraction, the numerator of
which is the aggregate Certificate Principal Balance of the Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class
M-1, Class M-2, Class M-3, Class B-1, Class B-2, Class B-3 and Class R-II
Certificates and the denominator of which is the aggregate Certificate Principal
Balance of all of the Certificates, and which bears interest at a rate equal to
6.85% per annum.
"Uncertificated REMIC I Regular Interest Y": An
uncertificated partial undivided beneficial ownership interest in REMIC I having
a principal balance equal to the Stated Principal Balance of the Mortgage Loans
and REO Property from time to time multiplied by a fraction, the numerator of
which is the aggregate Certificate Principal Balance of the Class A-1
Certificates and the denominator of which is the aggregate Certificate Principal
Balance of all of the Certificates, and which bears interest at a rate equal to
6.85% per annum.
"Uncertificated REMIC I Regular Interests":
Uncertificated REMIC I Regular Interest X, Uncertificated REMIC I Regular
Interest Y and the Uncertificated REMIC I IO Regular Interest.
"Uncertificated REMIC I IO Regular Interest
Distribution Amount": With respect to any Distribution Date, the sum of the
amounts deemed to be distributed on the Uncertificated REMIC I IO Regular
Interest for such Distribution Date pursuant to Section 4.07(a).
-39-
"Uncertificated REMIC I Regular Interest X Distribution
Amount": With respect to any Distribution Date, the sum of the amounts deemed to
be distributed on the Uncertificated REMIC I Regular Interest X for such
Distribution Date pursuant to Section 4.07(a).
"Uncertificated REMIC I Regular Interest Y Distribution
Amount": With respect to any Distribution Date, the sum of the amounts deemed to
be distributed on the Uncertificated REMIC I Regular Interest Y for such
Distribution Date pursuant to Section 4.07(a).
"Uncertificated REMIC I Regular Interest Distribution Amounts":
The Uncertificated REMIC I Regular Interest X Distribution Amount, the
Uncertificated REMIC I Regular Interest Z Distribution Amount and the
Uncertificated REMIC I IO Regular Interest Distribution Amount.
"Uninsured Cause": Any cause of damage to property
subject to a Mortgage such that the complete restoration of such property is not
fully reimbursable by the hazard insurance policies or flood insurance policies
required to be maintained pursuant to Section 3.13.
"United States Person": A citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in, or under the laws of, the United States or any political subdivision thereof
(except, in the case of a partnership, to the extent provided in regulations) or
an estate whose income is subject to United States federal income tax regardless
of its source, or a trust other than a "foreign trust" as defined in Section
7701(a)(31) of the Code.
"Variable Strip Certificates": Any one of the Class
A-11 Certificates.
"Voting Rights": The portion of the voting rights of
all of the Certificates which is allocated to any Certificate. At all times
during the term of this Agreement, 97% of all of the Voting Rights shall be
allocated among Holders of the Regular Certificates, 1% of all Voting Rights
shall be allocated to the Holders of the Class A-2 Certificates, 1% of all
Voting Rights shall be allocated to the Holders of the Class A-11 Certificates,
and the Holders of the Class R-I Certificates and Class R-II Certificates shall
be entitled to 0.5% and 0.5% of all of the Voting Rights, respectively,
allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests.
"Wendover": Wendover Funding, Inc.
-40-
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
The Depositor, as of the Closing Date, and concurrently
with the execution and delivery hereof, does hereby assign, transfer, sell, set
over and otherwise convey to the Trustee without recourse all the right, title
and interest of the Depositor in and to the Mortgage Loans identified on the
Mortgage Loan Schedule (exclusive of any prepayment fees and late payment
charges received thereon) and all other assets included or to be included in the
Trust Fund for the benefit of the Certificateholders. Such assignment includes
all principal and interest received by the Master Servicer on or with respect to
the Mortgage Loans (other than payment of principal and interest due on or
before the Cut-off Date).
In connection with such transfer and assignment, the
Depositor has caused the Seller to deliver to, and deposit with the Trustee, as
described in the Mortgage Loan Purchase Agreement the following documents or
instruments:
(i) the original Mortgage Note, endorsed "Bankers Trust
Company of California, N.A., as trustee under the Pooling
and Servicing Agreement relating to Impac Secured Assets
Corp., Mortgage Pass- Through Certificates, Series 1998-2"
with all intervening endorsements showing a complete chain
of endorsements from the originator to the Person endorsing
it to the Trustee;
(ii) the original recorded Mortgage or, if the original
Mortgage has not been returned from the applicable public
recording office, a copy of the Mortgage certified by the
Seller to be a true and complete copy of the original
Mortgage submitted for recording;
(iii) a duly executed original Assignment of the
Mortgage, without recourse, in recordable form to "Bankers
Trust Company of California, N.A., as trustee," or to
"Bankers Trust Company of California, N.A., as trustee for
holders of Impac Secured Assets Corp., Mortgage Pass-Through
Certificates", Series 1998-2 ;
(iv) the original recorded Assignment or Assignments of
the Mortgage showing a complete chain of assignment from the
originator thereof to the Person assigning it to the Trustee
or, if any such Assignment
-41-
has not been returned from the applicable public recording
office, a copy of such Assignment certified by the Seller to
be a true and complete copy of the original Assignment
submitted to the title insurance company for recording;
(v) the original title insurance policy, or, if such
policy has not been issued, any one of an original or a copy
of the preliminary title report, title binder or title
commitment on the Mortgaged Property with the original
policy of the insurance to be delivered promptly following
the receipt thereof;
(vi) the original of any assumption, modification,
extension or guaranty agreement; and
(vii) the original or a copy of the private mortgage
insurance policy or original certificate of private mortgage
insurance for each Mortgage Loan identified on the Mortgage
Loan Schedule as having a Loan-to-Value Ratio at origination
of 80% or greater.
The Seller is obligated as described in the Mortgage
Loan Purchase Agreement to deliver to the Trustee: (a) either the original
recorded Mortgage, or in the event such original cannot be delivered by the
Seller, a copy of such Mortgage certified as true and complete by the
appropriate recording office, in those instances where a copy thereof certified
by the Seller was delivered to the Trustee pursuant to clause (ii) above; and
(b) either the original Assignment or Assignments of the Mortgage, with evidence
of recording thereon, showing a complete chain of assignment from the originator
to the Seller, or in the event such original cannot be delivered by the Seller,
a copy of such Assignment or Assignments certified as true and complete by the
appropriate recording office, in those instances where copies thereof certified
by the Seller were delivered to the Trustee pursuant to clause (iv) above.
Notwithstanding anything to the contrary contained in this Section 2.01, in
those instances where the public recording office retains the original Mortgage
after it has been recorded, the Seller shall be deemed to have satisfied its
obligations hereunder upon delivery to the Trustee of a copy of such Mortgage
certified by the public recording office to be a true and complete copy of the
recorded original thereof.
If any Assignment is lost or returned unrecorded to the
Trustee because of any defect therein, the Seller is required, as described in
the Mortgage Loan Purchase Agreement, to prepare a substitute Assignment or cure
such defect, as the case may be, and the Seller shall cause such Assignment to
be recorded in accordance with this section.
-42-
The Seller is required as described in the Mortgage
Loan Purchase Agreement to exercise its best reasonable efforts to deliver or
cause to be delivered to the Trustee within 120 days of the Closing Date the
original or a photocopy of the title insurance policy with respect to each
Mortgage Loan assigned to the Trustee pursuant to this Section 2.01.
All original documents relating to the Mortgage Loans
which are not delivered to the Trustee are and shall be held by the Master
Servicer in trust for the benefit of the Trustee on behalf of the
Certificateholders.
Except as may otherwise expressly be provided herein,
neither the Depositor, the Master Servicer nor the Trustee shall (and the Master
Servicer shall ensure that no Sub-Servicer shall) assign, sell, dispose of or
transfer any interest in the Trust Fund or any portion thereof, or permit the
Trust Fund or any portion thereof to be subject to any lien, claim, mortgage,
security interest, pledge or other encumbrance of, any other Person.
It is intended that the conveyance of the Mortgage
Loans by the Depositor to the Trustee as provided in this Section be, and be
construed as, a sale of the Mortgage Loans and the Uncertificated REMIC I
Regular Interests as provided for in this Section 2.01 by the Depositor to the
Trustee for the benefit of the Certificateholders. It is, further, not intended
that such conveyance be deemed a pledge of the Mortgage Loans and the
Uncertificated REMIC I Regular Interests by the Depositor to the Trustee to
secure a debt or other obligation of the Depositor. However, in the event that
the Mortgage Loans and the Uncertificated REMIC I Regular Interests are held to
be property of the Depositor, or if for any reason this Agreement is held or
deemed to create a security interest in the Mortgage Loans and the
Uncertificated REMIC I Regular Interests, then it is intended that, (a) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the New York Uniform Commercial Code and the Uniform
Commercial Code of any other applicable jurisdiction; (b) the conveyance
provided for in this Section shall be deemed to be (1) a grant by the Depositor
to the Trustee of a security interest in all of the Depositor's right (including
the power to convey title thereto), title and interest, whether now owned or
hereafter acquired, in and to (A) the Mortgage Loans, including the Mortgage
Notes, the Mortgages, any related Insurance Policies and all other documents in
the related Mortgage Files, (B) all amounts payable to the holders of the
Mortgage Loans in accordance with the terms thereof, (C) the Uncertificated
REMIC I Regular Interests and (D) all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments, securities or other
property, including without limitation all amounts from time to time held or
invested in the Certificate Account or the Custodial Account, whether in the
form of cash, instruments, securities or other property and (2) an assignment by
the Depositor to the Trustee of any security interest in any and all of the
Seller's right (including the power to convey title thereto), title and
interest, whether now owned or hereafter acquired, in and to the property
described in the foregoing clauses (1)(A) through (D); (c) the possession by the
Trustee or its agent of Mortgage Notes and such other items of property as
constitute instruments, money,
-43-
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party" or possession by a purchaser or a person designated by such
secured party, for purposes of perfecting the security interest pursuant to the
New York Uniform Commercial Code and the Uniform Commercial Code of any other
applicable jurisdiction (including, without limitation, Sections 9- 305, 8-313
or 8-321 thereof); and (d) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law. The
Depositor and the Trustee shall, to the extent consistent with this Agreement,
take such actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans and the
Uncertificated REMIC I Regular Interests, such security interest would be deemed
to be a perfected security interest of first priority under applicable law and
will be maintained as such throughout the term of the Agreement.
SECTION 2.02. Acceptance of the Trust Fund by the
Trustee.
The Trustee acknowledges receipt (subject to any
exceptions noted in the Initial Certification described below), of the documents
referred to in Section 2.01 above and all other assets included in the
definition of "Trust Fund" and declares that it holds and will hold such
documents and the other documents delivered to it constituting the Mortgage
Files, and that it holds or will hold such other assets included in the
definition of "Trust Fund" (to the extent delivered or assigned to the Trustee),
in trust for the exclusive use and benefit of all present and future
Certificateholders.
The Trustee agrees, for the benefit of the
Certificateholders, to review or cause to be reviewed on its behalf, each
Mortgage File on or before the Closing Date to ascertain that all documents
required to be delivered to it are in its possession, and the Trustee agrees to
execute and deliver, or cause to be executed and delivered, to the Depositor and
the Master Servicer on the Closing Date, an Initial Certification in the form
annexed hereto as Exhibit C to the effect that, as to each Mortgage Loan listed
in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in such certification as not covered by
such certification), (i) all documents required to be delivered to it pursuant
to this Agreement with respect to such Mortgage Loan are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and
relate to such Mortgage Loan and (iii) based on its examination and only as to
the foregoing documents, the information set forth in items (i), (ii), (iii)(A)
and (iv) of the definition of the "Mortgage Loan Schedule" accurately reflects
information set forth in the Mortgage File. Neither the Trustee nor the Master
Servicer shall be under any duty to determine whether any Mortgage File should
include any of the documents specified in clause (vi) or (vii) of Section 2.01.
Neither the Trustee nor the Master Servicer shall be under any duty or
obligation to inspect, review or examine said documents, instruments,
-44-
certificates or other papers to determine that the same are genuine, enforceable
or appropriate for the represented purpose or that they have actually been
recorded, or they are in recordable form or that they are other than what they
purport to be on their face.
Within 90 days of the Closing Date the Trustee shall
deliver to the Depositor and the Master Servicer a Final Certification in the
form annexed hereto as Exhibit D evidencing the completeness of the Mortgage
Files, with any applicable exceptions noted thereon.
If in the process of reviewing the Mortgage Files and
preparing the certifications referred to above the Trustee finds any document or
documents constituting a part of a Mortgage File to be missing or defective in
any material respect, the Trustee shall promptly notify the Seller, the Master
Servicer and the Depositor. The Trustee shall promptly notify the Seller of such
defect and request that the Seller cure any such defect within 60 days from the
date on which the Seller was notified of such defect, and if the Seller does not
cure such defect in all material respects during such period, request on behalf
of the Certificateholders that the Seller purchase such Mortgage Loan from REMIC
I at the Purchase Price within 90 days after the date on which the Seller was
notified of such defect; provided that if such defect would cause the Mortgage
Loan to be other than a "qualified mortgage" as defined in Section 860G(a)(3) of
the Code, any such cure or repurchase must occur within 90 days from the date
such breach was discovered. It is understood and agreed that the obligation of
the Seller to cure a material defect in, or purchase any Mortgage Loan as to
which a material defect in a constituent document exists shall constitute the
sole remedy respecting such defect available to Certificateholders or the
Trustee on behalf of Certificateholders. The Purchase Price for the purchased
Mortgage Loan shall be deposited or caused to be deposited upon receipt by the
Master Servicer in the Custodial Account and, upon receipt by the Trustee of
written notification of such deposit signed by a Servicing Officer, the Trustee
shall release or cause to be released to the Seller the related Mortgage File
and shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, as the Seller shall require as necessary to vest in
the Seller ownership of any Mortgage Loan released pursuant hereto and at such
time the Trustee shall have no further responsibility with respect to the
related Mortgage File.
SECTION 2.03. Representations, Warranties and Covenants
of the Master Servicer and the Depositor.
(a) The Master Servicer hereby represents and warrants
to and covenants with the Depositor and the Trustee for the benefit of
Certificateholders that:
(i) The Master Servicer is, and throughout the term hereof shall
remain, a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation (except as
otherwise permitted pursuant to Section 6.02), the Master Servicer is,
and shall remain, in compliance with the laws of each state in which
-45-
any Mortgaged Property is located to the extent necessary to perform
its obligations under this Agreement, and the Master Servicer is, and
shall remain, approved to sell mortgage loans to and service mortgage
loans for FNMA and FHLMC;
(ii) The execution and delivery of this Agreement by the Master
Servicer, and the performance and compliance with the terms of this
Agreement by the Master Servicer, will not violate the Master Servicer's
articles of incorporation or bylaws or constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a
default) under, or result in the breach of, any material agreement or
other instrument to which it is a party or which is applicable to it or
any of its assets;
(iii) The Master Servicer has the full power and authority to
enter into and consummate all transactions contemplated by this
Agreement, has duly authorized the execution, delivery and performance
of this Agreement, and has duly executed and delivered this Agreement;
(iv) This Agreement, assuming due authorization, execution and
delivery by the Depositor and the Trustee, constitutes a valid, legal
and binding obligation of the Master Servicer, enforceable against the
Master Servicer in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the enforcement of creditors' rights generally, and (B)
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law;
(v) The Master Servicer is not in violation of, and its execution
and delivery of this Agreement and its performance and compliance with
the terms of this Agreement will not constitute a violation of, any law,
any order or decree of any court or arbiter, or any order, regulation or
demand of any federal, state or local governmental or regulatory
authority, which violation is likely to affect materially and adversely
either the ability of the Master Servicer to perform its obligations
under this Agreement or the financial condition of the Master Servicer;
(vi) 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 this Agreement or performing its obligations
under this Agreement or is likely to affect materially and adversely
either the ability of the Master Servicer to perform its obligations
under this Agreement or the financial condition of the Master Servicer;
(vii) The Master Servicer will comply in all material respects in
the performance of this Agreement with all reasonable rules and
requirements of each insurer under each Insurance Policy;
-46-
(viii) The execution of this Agreement and the performance of the
Master Servicer's obligations hereunder do not require any license,
consent or approval of any state or federal court, agency, regulatory
authority or other governmental body having jurisdiction over the Master
Servicer, other than such as have been obtained; and
(ix) No information, certificate of an officer, statement
furnished in writing or report delivered to the Depositor, any affiliate
of the Depositor or the Trustee by the Master Servicer in its capacity
as Master Servicer, and not in its capacity as a Seller hereunder, will,
to the knowledge of the Master Servicer, contain any untrue statement of
a material fact or omit a material fact necessary to make the
information, certificate, statement or report not misleading.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.03(a) shall survive the execution and
delivery of this Agreement, and shall inure to the benefit of the Depositor, the
Trustee and the Certificateholders. Upon discovery by the Depositor, the Trustee
or the Master Servicer of a breach of any of the foregoing representations,
warranties and covenants that materially and adversely affects the interests of
the Depositor or the Trustee, the party discovering such breach shall give
prompt written notice to the other parties.
(b) The Depositor hereby represents and warrants to the Master
Servicer and the Trustee for the benefit of Certificateholders that as of the
Closing Date, the representations and warranties of the Seller with respect to
the Mortgage Loans and the remedies therefor that are contained in the Mortgage
Loan Purchase Agreement are as set forth in Exhibit I hereto.
It is understood and agreed that the representations and warranties
set forth in this Section 2.03(b) shall survive delivery of the respective
Mortgage Files to the Trustee.
Upon discovery by either the Depositor, the Master Servicer or the
Trustee of a breach of any representation or warranty set forth in this Section
2.03 which materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the party discovering such breach shall
give prompt written notice to the other parties.
SECTION 2.04. Representations and Warranties of the Seller.
The Depositor hereby assigns to the Trustee for the benefit of
Certificateholders its interest in respect of the representations and warranties
made by the Seller in the Mortgage Loan Purchase Agreement or the exhibits
thereto. Insofar as the Mortgage Loan Purchase Agreement relates to such
representations and warranties and any remedies provided thereunder for any
breach of such representations and warranties, such right, title and interest
may be enforced by the Trustee on behalf of the Certificateholders. Upon the
discovery by the Depositor, the Master
-47-
Servicer or the Trustee of a breach of any of the representations and warranties
made in the Mortgage Loan Purchase Agreement in respect of any Mortgage Loan
which materially and adversely affects the interests of the Certificateholders
in such Mortgage Loan, the party discovering such breach shall give prompt
written notice to the other parties. The Trustee shall promptly notify the
Seller of such breach and request that the Seller shall, within 90 days from the
date that the Seller was notified or otherwise obtained knowledge of such
breach, either (i) cure such breach in all material respects or (ii) purchase
such Mortgage Loan from the Trust Fund at the Purchase Price and in the manner
set forth in Section 2.02; provided that if such breach would cause the Mortgage
Loan to be other than a "qualified mortgage" as defined in Section 860G(a)(3) of
the Code, any such cure or repurchase must occur within 90 days from the date
such breach was discovered. However, in the case of a breach under the Mortgage
Loan Purchase Agreement, subject to the approval of the Depositor the Seller
shall have the option to substitute a Qualified Substitute Mortgage Loan or
Loans for such Mortgage Loan if such substitution occurs within two years
following the Closing Date, except that if the breach would cause the Mortgage
Loan to be other than a "qualified mortgage" as defined in Section 860G(a)(3) of
the Code, any such substitution must occur within 90 days from the date the
breach was discovered if such 90 day period expires before two years following
the Closing Date. In the event that the Seller elects to substitute a Qualified
Substitute Mortgage Loan or Loans for a Deleted Mortgage Loan pursuant to this
Section 2.04, the Seller shall deliver to the Trustee for the benefit of the
Certificateholders with respect to such Qualified Substitute Mortgage Loan or
Loans, the original Mortgage Note, the Mortgage, an Assignment of the Mortgage
in recordable form, and such other documents and agreements as are required by
Section 2.01, with the Mortgage Note endorsed as required by Section 2.01. No
substitution will be made in any calendar month after the Determination Date for
such month. Monthly Payments due with respect to Qualified Substitute Mortgage
Loans in the month of substitution shall not be part of the Trust Fund and will
be retained by the Master Servicer and remitted by the Master Servicer to the
Seller on the next succeeding Distribution Date. For the month of substitution,
distributions to Certificateholders will include the Monthly Payment due on a
Deleted Mortgage Loan for such month and thereafter the Seller shall be entitled
to retain all amounts received in respect of such Deleted Mortgage Loan. The
Depositor shall amend or cause to be amended the Mortgage Loan Schedule for the
benefit of the Certificateholders to reflect the removal of such Deleted
Mortgage Loan and the substitution of the Qualified Substitute Mortgage Loan or
Loans and the Depositor shall deliver the amended Mortgage Loan Schedule to the
Trustee. Upon such substitution, the Qualified Substitute Mortgage Loan or Loans
shall be subject to the terms of this Agreement in all respects, the Seller
shall be deemed to have made the representations and warranties with respect to
the Qualified Substitute Mortgage Loan contained in the Mortgage Loan Purchase
Agreement as of the date of substitution, and the Depositor shall be deemed to
have made with respect to any Qualified Substitute Mortgage Loan or Loans, as of
the date of substitution, the representations and warranties set forth in
Section 2.03 hereof.
-48-
In connection with the substitution of one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Qualified Substitute Mortgage Loans as of the date of
substitution is less than the aggregate Stated Principal Balance of all such
Deleted Mortgage Loans (in each case after application of the principal portion
of the Monthly Payments due in the month of substitution that are to be
distributed to Certificateholders in the month of substitution). The Seller
shall provide the Master Servicer on the day of substitution for immediate
deposit into the Custodial Account the amount of such shortfall, without any
reimbursement therefor. The Seller shall give notice in writing to the Trustee
of such event, which notice shall be accompanied by an Officers' Certificate as
to the calculation of such shortfall and by an Opinion of Counsel to the effect
that such substitution will not cause (a) any federal tax to be imposed on REMIC
I or REMIC II, including without limitation, any federal tax imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code or
(b) any portion of REMIC I or REMIC II to fail to qualify as a REMIC at any time
that any Certificate is outstanding. The costs of any substitution as described
above, including any related assignments, opinions or other documentation in
connection therewith shall be borne by the Seller.
Except as expressly set forth herein neither the Trustee nor the
Master Servicer is under any obligation to discover any breach of the above
mentioned representations and warranties. It is understood and agreed that the
obligation of the Seller to cure such breach, purchase or to substitute for such
Mortgage Loan as to which such a breach has occurred and is continuing shall
constitute the sole remedy respecting such breach available to
Certificateholders or the Trustee on behalf of Certificateholders.
SECTION 2.05. Issuance of Certificates Evidencing Interests in the
REMIC I Certificates.
The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery of the Mortgage Files to it, subject to any exceptions noted
pursuant to Section 2.02 above, together with the assignment to it of all other
assets included in REMIC I, receipt of which is hereby acknowledged.
Concurrently with such delivery and in exchange therefor, the Trustee, pursuant
to the written request of the Depositor, executed by an officer of the
Depositor, has executed and caused to be authenticated and delivered to, or upon
the order of, the Depositor the Class R-I Certificates in authorized
denominations which together with the Uncertificated REMIC I Regular Interests,
evidence ownership of REMIC I. The rights of the Class R-I Certificateholders
and REMIC II to receive distributions from the proceeds of REMIC I in respect of
the Class R-I Certificates and the Uncertificated REMIC I Regular Interests, and
all ownership interests of the Class R-I Certificateholders and REMIC II in such
distributions, shall be as set forth in this Agreement.
-49-
SECTION 2.06. Conveyance of Uncertificated REMIC I Regular
Interests; Acceptance by the Trustee.
The Depositor, as of the Closing Date, and concurrently with the
execution and delivery hereof, does hereby assign without recourse all the
right, title and interest of the Depositor in and to the Uncertificated REMIC I
Regular Interests to the Trustee for the benefit of the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9,
Class A-10, Class A-11, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2,
Class B-3 and Class R-II Certificateholders. The Trustee acknowledges receipt of
the Uncertificated REMIC I Regular Interests and declares that it holds and will
hold the same in trust for the exclusive use and benefit of all present and
future Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-7, Class A-8, Class A-9, Class A-10, Class A-11, Class M-1, Class M-2, Class
M-3, Class B-1, Class B-2, Class B-3 and Class R-II Certificateholders. The
rights of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7, Class A-8, Class A-9, Class A-10, Class A-11, Class M-1, Class M-2,
Class M-3, Class B-1, Class B-2, Class B-3 and Class R-II Certificateholders to
receive distributions from the proceeds of REMIC II in respect of the Class ▇-▇,
▇▇▇▇▇ ▇-▇, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8,
Class A-9, Class A-10, Class A-11, Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2, Class B-3 and Class R-II Certificates, and all ownership interests of
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8, Class A-9, Class A-10, Class A-11, Class M-1, Class M-2, Class M-3,
Class B-1, Class B-2, Class B-3 and Class R-II Certificateholders in such
distributions, shall be as set forth in this Agreement.
SECTION 2.07. Issuance of Certificates Evidencing Interest in
REMIC II.
The Trustee acknowledges the assignment to it of the Uncertificated
REMIC I Regular Interests and, concurrently therewith and in exchange therefor,
pursuant to the written request of the Depositor executed by an officer of the
Depositor, the Trustee has executed and caused to be authenticated and delivered
to or upon the order of the Depositor, the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10,
Class A-11, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2, Class B-3 and
Class R-II Certificates in authorized denominations evidencing ownership of the
entire REMIC II.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
SECTION 3.01. Master Servicer to Act as Master Servicer.
-50-
The Master Servicer shall supervise, or take such actions as are
necessary to ensure, the servicing and administration of the Mortgage Loans and
any REO Property in accordance with this Agreement and its normal servicing
practices, which generally shall conform to the standards of an institution
prudently servicing mortgage loans for its own account and shall have full
authority to do anything it reasonably deems appropriate or desirable in
connection with such servicing and administration. The Master Servicer may
perform its responsibilities relating to servicing through other agents or
independent contractors, but shall not thereby be released from any of its
responsibilities as hereinafter set forth. The authority of the Master Servicer,
in its capacity as master servicer, and any Sub-Servicer acting on its behalf,
shall include, without limitation, the power to (i) consult with and advise any
Sub-Servicer regarding administration of a related Mortgage Loan, (ii) approve
any recommendation by a Sub-Servicer to foreclose on a related Mortgage Loan,
(iii) supervise the filing and collection of insurance claims and take or cause
to be taken such actions on behalf of the insured Person thereunder as shall be
reasonably necessary to prevent the denial of coverage thereunder, and (iv)
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing a related Mortgage Loan, including the employment of
attorneys, the institution of legal proceedings, the collection of deficiency
judgments, the acceptance of compromise proposals, the filing of claims under
any Primary Insurance Policy and any other matter pertaining to a delinquent
Mortgage Loan. The authority of the Master Servicer shall include, in addition,
the power on behalf of the Certificateholders, the Trustee or any of them to (i)
execute and deliver customary consents or waivers and other instruments and
documents, (ii) consent to transfer of any related Mortgaged Property and
assumptions of the related Mortgage Notes and Security Instruments (in the
manner provided in this Agreement) and (iii) collect any Insurance Proceeds and
Liquidation Proceeds. Without limiting the generality of the foregoing, the
Master Servicer and any Sub-Servicer acting on its behalf may, and is hereby
authorized, and empowered by the Trustee to, execute and deliver, on behalf of
itself, the Certificateholders or the Trustee or any of them, any instruments of
satisfaction, cancellation, partial or full release, discharge and all other
comparable instruments, with respect to the related Mortgage Loans, the
Insurance Policies and the accounts related thereto, and the Mortgaged
Properties. The Master Servicer may exercise this power in its own name or in
the name of a Sub-Servicer.
In accordance with the standards of the preceding paragraph, the
Master Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.09, and further as
provided in Section 3.11. No costs incurred by the Master Servicer or by
Sub-Servicers in effecting the payment of taxes and assessments on the Mortgaged
Properties shall, for the purpose of calculating distributions to
Certificateholders, be added to the amount owing under the related Mortgage
Loans, notwithstanding that the terms of such Mortgage Loans so permit.
-51-
Notwithstanding anything in this Agreement to the contrary, the
Master Servicer shall not (unless the Mortgagor is in default with respect to
the Mortgage Loan or such default is, in the judgment of the Master Servicer,
reasonably foreseeable) make or permit any modification, waiver or amendment of
any term of any Mortgage Loan that would both (i) effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or Treasury
regulations promulgated thereunder) and (ii) cause either REMIC I or REMIC II to
fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions" after the startup date under the
REMIC Provisions.
The relationship of the Master Servicer (and of any successor to the
Master Servicer under this Agreement) to the Trustee under this Agreement is
intended by the parties to be that of an independent contractor and not that of
a joint venturer, partner or agent.
SECTION 3.02. Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers.
(a) The Master Servicer may enter into Sub-servicing Agreements with
Sub- Servicers for the servicing and administration of the Mortgage Loans and
for the performance of any and all other activities of the Master Servicer
hereunder. Each Sub-Servicer shall be either (i) an institution the accounts of
which are insured by the FDIC or (ii) another entity that engages in the
business of originating or servicing mortgage loans comparable to the Mortgage
Loans, and in either case shall be authorized to transact business in the state
or states in which the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub-servicing
Agreement, and in either case shall be a FHLMC or FNMA approved mortgage
servicer. Any Sub-servicing Agreement entered into by the Master Servicer shall
include the provision that such Agreement may be immediately terminated (x) with
cause and without any termination fee by any Master Servicer hereunder or (y)
without cause in which case the Master Servicer shall be responsible for any
termination fee or penalty resulting therefrom. In addition, each Sub-servicing
Agreement shall provide for servicing of the Mortgage Loans consistent with the
terms of this Servicing Agreement. With the consent of the Trustee, the Master
Servicer and the Sub-Servicers may enter into Sub-servicing Agreements and make
amendments to the Sub-servicing Agreements or enter into different forms of
Sub-servicing Agreements providing for, among other things, the delegation by
the Master Servicer to a Sub-Servicer of additional duties regarding the
administration of the Mortgage Loans; provided, however, that any such
amendments or different forms shall be consistent with and not violate the
provisions of this Servicing Agreement, and that no such amendment or different
form shall be made or entered into which could be reasonably expected to be
materially adverse to the interests of the Certificateholders, without the
consent of the Holders of Certificates entitled to at least 51% of the Voting
Rights. The parties hereto acknowledge that the initial Sub-Servicer shall be
Wendover Funding Inc.
-52-
The Master Servicer has entered into Sub-servicing Agreements with the
Initial Sub- Servicer for the servicing and administration of the Mortgage Loans
and may enter into additional Sub-servicing Agreements with Sub-Servicers
acceptable to the Trustee for the servicing and administration of certain of the
Mortgage Loans.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each Sub-Servicer under the related Sub-servicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub-servicing Agreements and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Master Servicer shall pay the costs of such enforcement at its own expense, but
shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement only to the extent, if any, that such recovery exceeds all
amounts due in respect of the related Mortgage Loan or (ii) from a specific
recovery of costs, expenses or attorneys' fees against the party against whom
such enforcement is directed.
SECTION 3.03. Successor Sub-Servicers.
The Master Servicer shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accor dance with the terms and conditions of such
Sub-Servicing Agreement. In the event of termination of any Sub-Servicer, all
servicing obligations of such Sub-Servicer shall be assumed simultaneously by
the Master Servicer without any act or deed on the part of such Sub-Servicer or
the Master Servicer, and the Master Servicer either shall service directly the
related Mortgage Loans or shall enter into a Sub-Servicing Agreement with a
successor Sub-Servicer which qualifies under Section 3.02.
SECTION 3.04. Liability of the Master Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Master
Servicer and a Sub- Servicer or reference to actions taken through a
Sub-Servicer or otherwise, the Master Servicer shall under all circumstances
remain obligated and primarily liable to the Trustee and Certificateholders for
the servicing and administering of the Mortgage Loans and any REO Property in
accordance with the provisions of Section 3 without diminution of such
obligation or liability by virtue of such Sub-Servicing Agreements or
arrangements or by virtue of indemnification from the Sub-Servicer and to the
same extent and under the same terms and conditions as if the Master Servicer
alone were servicing and administering the Mortgage Loans. For purposes of this
Agreement, the Master Servicer shall be deemed to have received payments on
Mortgage Loans when the Sub-Servicer has received such payments. The Master
Servicer shall
-53-
be entitled to enter into any agreement with a Sub-Servicer for indemnification
of the Master Servicer by such Sub-Servicer and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and
Trustee or Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such and not as an originator shall be deemed to be between
the Sub-Servicer and the Master Servicer alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Sub-Servicer
except as set forth in Section 3.06. The Master Servicer (or Sub-Servicer) shall
be liable for the payment of any franchise taxes which may be assessed by the
California Franchise Tax Board in connection with the activities of the Trust
under this Agreement.
SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements
by Trustee.
(a) If the Trustee or its designee shall assume the master servicing
obligations of the Master Servicer in accordance with Section 7.02 below, the
Trustee, to the extent necessary to permit the Trustee to carry out the
provisions of Section 7.02 with respect to the Mortgage Loans, shall succeed to
all of the rights and obligations of the Master Servicer under each of the
Sub-servicing Agreements. In such event, the Trustee or its designee as the
successor master servicer shall be deemed to have assumed all of the Master
Servicer's rights and obligations therein and to have replaced the Master
Servicer as a party to such Sub-servicing Agreements to the same extent as if
such Sub-servicing Agreements had been assigned to the Trustee or its designee
as a successor master servicer, except that the Trustee or its designee as a
successor master servicer shall not be deemed to have assumed any obligations or
liabilities of the Master Servicer arising prior to such assumption (other than
the obligation to make any Advances) and the Master Servicer shall not thereby
be relieved of any liability or obligations under such Sub- servicing Agreements
arising prior to such assumption. Nothing in the foregoing shall be deemed to
entitle the Trustee or its designee as a successor master servicer at any time
to receive any portion of the servicing compensation provided under Section 3.17
except for such portion as the Master Servicer would be entitled to receive.
(b) In the event that the Trustee or its designee as successor
master servicer for the Trustee assumes the servicing obligations of the Master
Servicer under Section 7.02, upon the reasonable request of the Trustee or such
designee as successor master servicer the Master Servicer shall at its own
expense deliver to the Trustee, or at its written request to such designee,
photocopies of all documents, files and records, electronic or otherwise,
relating to the Sub-
-54-
servicing Agreements and the related Mortgage Loans or REO Property then being
serviced and an accounting of amounts collected and held by it, if any, and will
otherwise cooperate and use its reasonable efforts to effect the orderly and
efficient transfer of the Sub-servicing Agreements, or responsibilities
hereunder to the Trustee, or at its written request to such designee as
successor master servicer.
SECTION 3.07. Collection of Certain Mortgage Loan Payments.
(a) The Master Servicer will coordinate and monitor remittances by
Sub- Servicers to the Trustee with respect to the Mortgage Loans in accordance
with this Agreement.
(b) The Master Servicer shall make its reasonable efforts to collect
or cause to be collected all payments required under the terms and provisions of
the Mortgage Loans and shall follow, and use its reasonable efforts to cause
Sub-Servicers to follow, collection procedures comparable to the collection
procedures of prudent mortgage lenders servicing mortgage loans for their own
account to the extent such procedures shall be consistent with this Agreement.
Consistent with the foregoing, the Master Servicer may in its discretion (i)
waive or permit to be waived any late payment charge, prepayment charge,
assumption fee, or any penalty interest in connection with the prepayment of a
Mortgage Loan and (ii) suspend or reduce or permit to be suspended or reduced
regular monthly payments for a period of up to six months, or arrange or permit
an arrangement with a Mortgagor for a scheduled liquidation of delinquencies. In
the event the Master Servicer shall consent to the deferment of the due dates
for payments due on a Mortgage Note, the Master Servicer shall nonetheless make
an Advance or shall cause the related Sub-Servicer to make an advance to the
same extent as if such installment were due, owing and delinquent and had not
been deferred through liquidation of the Mortgaged Property; PROVIDED, HOWEVER,
that the obligation of the Master Servicer or related Sub-Servicer to make an
Advance shall apply only to the extent that the Master Servicer believes, in
good faith, that such advances are not Nonrecoverable Advances.
(c) Within five Business Days after the Master Servicer has
determined that all amounts which it expects to recover from or on account of a
Mortgage Loan have been recovered and that no further Liquidation Proceeds will
be received in connection therewith, the Master Servicer shall provide to the
Trustee a certificate of a Servicing Officer that such Mortgage Loan became a
Liquidated Mortgage Loan has a Cash Liquidation or REO Disposition as of the
date of such determination.
The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any related Insurance Policy, follow such collection
procedures as it would follow with respect to mortgage loans comparable to the
Mortgage Loans and held for its own account. The Master Servicer shall not
-55-
be required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Mortgage Note, Primary Hazard Insurance
Policy or otherwise or against any public or governmental authority with respect
to a taking or condemnation) if it reasonably believes that it is prohibited by
applicable law from enforcing the provision of the Mortgage or other instrument
pursuant to which such payment is required. The Master Servicer shall be
responsible for preparing and distributing all information statements relating
to payments on the Mortgage Loans, in accordance with all applicable federal and
state tax laws and regulations.
SECTION 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage Loan
pursuant to a Sub-Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
otherwise be acceptable to the Master Servicer. All amounts held in a
Sub-Servicing Account shall be held in trust for the Trustee for the benefit of
the Certificateholders. Any investment of funds held in such an account shall be
in Permitted Investments maturing not later than the Business Day immediately
preceding the next Sub- Servicing Remittance Date. The Sub-Servicer will be
required to deposit into the Sub-Servicing Account no later than the first
Business Day after receipt all proceeds of Mortgage Loans received by the
Sub-Servicer, less its servicing compensation and any unreimbursed expenses and
advances, to the extent permitted by the Sub-Servicing Agreement. On each
Sub-Servicer Remittance Date the Sub-Servicer will be required to remit to the
Master Servicer for deposit in the Custodial Account all funds held in the
Sub-Servicing Account with respect to any Mortgage Loan as of the Sub-Servicer
Remittance Date, after deducting from such remittance an amount equal to the
servicing compensation (including interest on Permitted Investments) and
unreimbursed expenses and advances to which it is then entitled pursuant to the
related Sub-Servicing Agreement, to the extent not previously paid to or
retained by it. In addition, on each Sub-Servicer Remittance Date the
Sub-Servicer will be required to remit to the Master Servicer any amounts
required to be advanced pursuant to the related Sub-Servicing Agreement. The
Sub-Servicer will also be required to remit to the Master Servicer, within one
Business Day of receipt, the proceeds of any Principal Prepayment made by the
Mortgagor and any Insurance Proceeds or Liquidation Proceeds.
SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.
The Master Servicer and the Sub-Servicers shall establish and
maintain one or more accounts (the "Servicing Accounts"), and shall deposit and
retain therein all collections from the Mortgagors (or related advances from
Sub-Servicers) for the payment of taxes, assessments, Primary Hazard Insurance
Policy premiums, and comparable items for the account of the Mortgagors, to the
extent that the Master Servicer customarily escrows for such amounts.
-56-
Withdrawals of amounts so collected from a Servicing Account may be made only to
(i) effect payment of taxes, assessments, Primary Hazard Insurance Policy
premiums, payments under the CMAC PMI Policy and comparable items; (ii)
reimburse the Master Servicer (or a Sub-Servicer to the extent provided in the
related Sub-Servicing Agreement) out of related collections for any payments
made pursuant to Sections 3.01 (with respect to taxes and assessments), and 3.13
(with respect to Primary Hazard Insurance Policies); (iii) refund to Mortgagors
any sums as may be determined to be overages; or (iv) clear and terminate the
Servicing Account at the termination of this Agreement pursuant to Section 9.01.
As part of its servicing duties, the Master Servicer or Sub-Servicers shall, if
and to the extent required by law, pay to the Mortgagors interest on funds in
Servicing Accounts from its or their own funds, without any reimbursement
therefor.
SECTION 3.10. Custodial Account.
(a) The Master Servicer shall establish and maintain one or more
accounts (collectively, the "Custodial Account") in which the Master Servicer
shall deposit or cause to be deposited on a daily basis, or as and when received
from the Sub-Servicers, the following payments and collections received or made
by or on behalf of it subsequent to the Cut-off Date, or received by it prior to
the Cut-off Date but allocable to a period subsequent thereto (other than in
respect of principal and interest on the Mortgage Loans due on or before the
Cut-off Date):
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans, net
of any portion thereof retained by the Master Servicer or any
Sub-Servicer as Servicing Fees and net of any portion thereof payable to
CMAC under the CMAC PMI Policy;
(iii) all Insurance Proceeds, other than proceeds that represent
reimbursement of costs and expenses incurred by the Master Servicer in
connection with presenting claims under the related Insurance Policies,
Liquidation Proceeds and REO Proceeds;
(iv) all proceeds of any Mortgage Loan or REO Property repurchased
or purchased in accordance with Sections 2.02, 2.04 , 3.14, 3.22, 3.24
or 9.01; and all amounts required to be deposited in connection with the
substitution of a Qualified Substitute Mortgage Loan pursuant to Section
2.04; and
(v) any amounts required to be deposited pursuant to Section 3.12 or
3.13.
The foregoing requirements for deposit in the Custodial Account
shall be exclusive. In the event the Master Servicer shall deposit in the
Custodial Account any amount not required to be deposited therein, it may
withdraw such amount from the Custodial Account, any provision
-57-
herein to the contrary notwithstanding. The Custodial Account shall be
maintained as a segregated account, separate and apart from trust funds created
for mortgage pass-through certificates of other series, and the other accounts
of the Master Servicer.
(b) Funds in the Custodial Account may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12. The
Master Servicer shall give notice to the Trustee and the Depositor of the
location of the Custodial Account after any change thereof.
SECTION 3.11. Permitted Withdrawals From the Custodial Account.
The Master Servicer may, from time to time as provided herein, make
withdrawals from the Custodial Account of amounts on deposit therein pursuant to
Section 3.10 that are attributable to the Mortgage Loans for the following
purposes:
(i) to make deposits into the Certificate Account in the amounts
and in the manner provided for in Section 4.01;
(ii) to pay to itself, the Depositor, the Seller or any other
appropriate person, as the case may be, with respect to each Mortgage
Loan that has previously been purchased or repurchased pursuant to
Sections 2.02, 2.04, 3.14, 3.24 or 9.01 all amounts received thereon and
not yet distributed as of the date of purchase or repurchase;
(iii) to reimburse itself or any Sub-Servicer for Advances not
previously reimbursed, the Master Servicer's or any Sub-Servicer's right
to reimbursement pursuant to this clause (iii) being limited to amounts
received which represent Late Collections (net of the related Servicing
Fees) of Monthly Payments on Mortgage Loans with respect to which such
Advances were made and as further provided in Section 3.15;
(iv) to reimburse or pay itself, the Trustee or the Depositor
for expenses incurred by or reimbursable to the Master Servicer, the
Trustee or the Depositor pursuant to Sections 3.22, 6.03, 8.05 or
10.01(g), except as otherwise provided in such Sections;
(v) to reimburse itself or any Sub-Servicer for costs and
expenses incurred by or reimbursable to it relating to the prosecution
of any claims pursuant to Section 3.13 that are in excess of the amounts
so recovered;
(vi) to reimburse itself or any Sub-Servicer for unpaid
Servicing Fees and unreimbursed Servicing Advances, the Master
Servicer's or any Sub-Servicer's right to reimbursement pursuant to this
clause (vi) with respect to any Mortgage Loan being limited to late
recoveries of the payments for which such advances were made pursuant to
Section 3.01 or Section 3.09 and any other related Late Collections;
-58-
(vii) to pay itself as servicing compensation (in addition to
the Servicing Fee), on or after each Distribution Date, any interest or
investment income earned on funds deposited in the Custodial Account for
the period ending on such Distribution Date;
(viii) to reimburse itself or any Sub-Servicer for any Advance
previously made, after a Realized Loss has been allocated with respect
to the related Mortgage Loan if the Advance was not reimbursed pursuant
to clauses (iii) and (vi); and
(ix) to clear and terminate the Custodial Account at the
termination of this Agreement pursuant to Section 9.01.
The Master Servicer shall keep and maintain separate accounting
records on a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying
any withdrawal from the Custodial Account pursuant to such subclauses (ii)
through (viii).
SECTION 3.12. Permitted Investments.
Any institution maintaining the Custodial Account shall at the
direction of the Master Servicer invest the funds in such account in Permitted
Investments, each of which shall mature not later than (i) the Business Day
immediately preceding the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement, if a Person other than the Trustee
is the obligor thereon, and (ii) no later than the date on which such funds are
required to be withdrawn from such account pursuant to this Agreement, if the
Trustee is the obligor thereon and shall not be sold or disposed of prior to its
maturity. All income and gain realized from any such investment as well as any
interest earned on deposits in the Custodial Account shall be for the benefit of
the Master Servicer. The Master Servicer shall deposit in the Custodial Account
an amount equal to the amount of any loss incurred in respect of any such
investment immediately upon realization of such loss without right of
reimbursement.
SECTION 3.13. Maintenance of Primary Hazard Insurance.
(a) The Master Servicer shall cause to be maintained for each
Mortgage Loan primary hazard insurance by a Qualified Insurer or other insurer
satisfactory to the Rating Agencies with extended coverage on the related
Mortgaged Property in an amount equal to the lesser of (i) 100% of the
replacement value of the improvements, as determined by the insurance company,
on such Mortgaged Property or (ii) the unpaid principal balance of the Mortgage
Loan. The Master Servicer shall also cause to be maintained on property acquired
upon foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan, fire
insurance with extended coverage in an amount equal to the replacement value of
the improvements thereon. Pursuant to Section 3.10, any amounts collected by the
Master Servicer under any such policies (other than amounts to be
-59-
applied to the restoration or repair of the related Mortgaged Property or
property thus acquired or amounts released to the Mortgagor in accordance with
the Master Servicer's normal servicing procedures) shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 3.11. Any cost
incurred by the Master Servicer in maintaining any such insurance shall not, for
the purpose of calculating monthly distributions to Certificateholders, be added
to the amount owing under the Mortgage Loan, notwithstanding that the terms of
the Mortgage Loan so permit. It is understood and agreed that no earthquake or
other additional insurance is to be required of any Mortgagor or maintained on
property acquired in respect of a Mortgage Loan other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance.
The Master Servicer shall, or shall cause the related Sub-Servicer
to, exercise its best reasonable efforts to maintain and keep in full force and
effect each Primary Insurance Policy by a Qualified Insurer, or other insurer
satisfactory to the Rating Agencies, with respect to each first lien Mortgage
Loan as to which as of the Cut-Off Date such a Primary Insurance Policy was in
effect (or, in the case of a Substitute Mortgage Loan, the date of substitution)
and the original principal amount of the related Mortgage Note exceeded 80% of
the Collateral Value in an amount at least equal to the excess of such original
principal amount over 75% of such Collateral Value until the principal amount of
any such first lien Mortgage Loan is reduced below 80% of the Collateral Value
or, based upon a new appraisal, the principal amount of such first lien Mortgage
Loan represents less than 80% of the new appraised value. The Master Servicer
shall, or shall cause the related Sub-Servicer to, effect the timely payment of
the premium on each Primary Insurance Policy. The Master Servicer and the
related Sub-Servicer shall have the power to substitute for any Primary
Insurance Policy another substantially equivalent policy issued by another
Qualified Insurer, PROVIDED, THAT, such substitution shall be subject to the
condition that it will not cause the ratings on the Certificates to be
downgraded or withdrawn, as evidenced in writing from each Rating Agency.
The Master Servicer and the Trustee shall maintain and keep in full
force and effect the CMAC PMI Policy with respect to each CMAC Insured Loan. The
Master Servicer shall effect the timely payment of the premium on the CMAC PMI
Policy. In the event of a claim under the CMAC PMI Policy, the Master Servicer
shall contact the Trustee and the Trustee shall contact CMAC to obtain any
proceeds available thereunder.
No earthquake or other additional insurance is to be required of any
Mortgagor or maintained on property acquired with respect to a security
instrument other than pursuant to such applicable laws and regulations as shall
at any time be in force and shall require such additional insurance. When, at
the time of origination of the Mortgage Loan or at any subsequent time, the
Mortgaged Property is located in a federally designated special flood hazard
area, the Master Servicer shall use its best reasonable efforts to cause with
respect to the Mortgage Loans and each REO Property flood insurance (to the
extent available and in accordance with mortgage servicing
-60-
industry practice) to be maintained. Such flood insurance shall cover the
Mortgaged Property, including all items taken into account in arriving at the
Collateral Value on which the Mortgage Loan was based, and shall be in an amount
equal to the lesser of (i) the Stated Principal Balance of the related Mortgage
Loan and (ii) the minimum amount required under the terms of coverage to
compensate for any damage or loss on a replacement cost basis, but not more than
the maximum amount of such insurance available for the related Mortgaged
Property under either the regular or emergency programs of the National Flood
Insurance Program (assuming that the area in which such Mortgaged Property is
located is participating in such program). Unless applicable state law requires
a higher deductible, the deductible on such flood insurance may not exceed
$1,000 or 1% of the applicable amount of coverage, whichever is less.
In the event that the Master Servicer shall obtain and maintain a
blanket fire insurance policy with extended coverage insuring against hazard
losses on all of the Mortgage Loans, it shall conclusively be deemed to have
satisfied its obligations as set forth in the first two sentences of this
Section 3.13, it being understood and agreed that such policy may contain a
deductible clause, in which case the Master Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
complying with the first two sentences of this Section 3.13 and there shall have
been a loss which would have been covered by such policy, deposit in the
Certificate Account from its own funds the amount not otherwise payable under
the blanket policy because of such deductible clause. Any such deposit by the
Master Servicer shall be made on the Certificate Account Deposit Date next
preceding the Distribution Date which occurs in the month following the month in
which payments under any such policy would have been deposited in the Custodial
Account. In connection with its activities as administrator and servicer of the
Mortgage Loans, the Master Servicer agrees to present, on behalf of itself, the
Trustee and Certificateholders, claims under any such blanket policy.
SECTION 3.14. Enforcement of Due-on-Sale Clauses; Assumption
Agreements.
The Master Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of the Mortgaged Property
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note or the
Mortgage), exercise or cause to be exercised its rights to accele rate the
maturity of such Mortgage Loan under any "due-on-sale" clause applicable
thereto; provided, however, that the Master Servicer shall not exercise any such
rights if it reasonably believes that it is prohibited by law from doing so. The
Master Servicer or the related Sub-Servicer may repurchase a Mortgage Loan at
the Purchase Price when the Master Servicer requires acceleration of the
Mortgage Loan, but only if the Master Servicer is satisfied, as evidenced by an
Officer's Certificate delivered to the Trustee, that either (i) such Mortgage
Loan is in default or default is reasonably foreseeable or (ii) if such Mortgage
Loan is not in default or default is not reasonably foreseeable, such repurchase
will have no adverse tax consequences for
-61-
the Trust Fund or any Certificateholder. If the Master Servicer is unable to
enforce such "due-on-sale" clause (as provided in the second preceding sentence)
or if no "due-on-sale" clause is applicable, the Master Servicer or the
Sub-Servicer will use its best efforts to enter into an assumption and
modification agreement with the Person to whom such property has been conveyed
or is proposed to be conveyed, pursuant to which such Person becomes liable
under the Mortgage Note and, to the extent permitted by applicable state law,
the Mortgagor remains liable thereon; provided, however, that the Master
Servicer shall not enter into any assumption and modification agreement if the
coverage provided under the Primary Insurance Policy, if any, would be impaired
by doing so. The Master Servicer shall notify the Trustee, whenever possible,
before the completion of such assumption agreement, and shall forward to the
Trustee the original copy of such assumption agreement, which copy shall be
added by the Trustee to the related Mortgage File and which shall, for all
purposes, be considered a part of such Mortgage File to the same extent as all
other documents and instruments constituting a part thereof. In connection with
any such assumption agreement, the interest rate on the related Mortgage Loan
shall not be changed and no other material alterations in the Mortgage Loan
shall be made unless such material alteration would not cause either REMIC I or
REMIC II to fail to qualify as a REMIC for federal income tax purposes, as
evidenced by an Opinion of Counsel. The Master Servicer is also authorized to
enter into a substitution of liability agreement with such Person, pursuant to
which the original Mortgagor is released from liability and such Person is
substituted as the Mortgagor and becomes liable under the Mortgage Note. Any fee
collected by or on behalf of the Master Servicer for entering into an assumption
or substitution of liability agreement will be retained by or on behalf of the
Master Servicer as additional servicing compensation. In connection with any
such assumption, no material term of the Mortgage Note (including but not
limited to the Mortgage Rate, the amount of the Monthly Payment and any other
term affecting the amount or timing of payment on the Mortgage Loan) may be
changed. The Master Servicer shall not enter into any substitution or assumption
if such substitution or assumption shall (i) both constitute a "significant
modification" effecting an exchange or reissuance of such Mortgage Loan under
the Code (or Treasury regulations promulgated thereunder) and cause either REMIC
I or REMIC II to fail to qualify as a REMIC under the REMIC Provisions or (ii)
cause the imposition of any tax on "prohibited transactions" or "contributions"
after the Startup Day under the REMIC Provisions. The Master Servicer shall
notify the Trustee that any such substitution or assumption agreement has been
completed by forwarding to the Trustee the original copy of such substitution or
assumption agreement, which copy shall be added to the related Mortgage File and
shall, for all purposes, be considered a part of such Mortgage File to the same
extent as all other documents and instruments constituting a part thereof. A
portion equal to up to 2% of the Collateral Value of the related Mortgage Loan,
of any fee or additional interest collected by the related Sub-Servicer for
consenting in any such conveyance or entering into any such assumption agreement
may be retained by the related Sub-Servicer as additional servicing
compensation.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Master Servicer shall not be deemed to be in default, breach
or any other violation of its
-62-
obligations hereunder by reason of any assumption of a Mortgage Loan by
operation of law or any assumption that the Master Servicer may be restricted by
law from preventing, for any reason whatsoever. For purposes of this Section
3.14, the term "assumption" is deemed to also include a sale of a Mortgaged
Property that is not accompanied by an assumption or substitution of liability
agreement.
SECTION 3.15. Realization Upon Defaulted Mortgage Loans.
The Master Servicer shall exercise reasonable efforts, consistent
with the procedures that the Master Servicer would use in servicing loans for
its own account, to foreclose upon or otherwise comparably convert (which may
include an REO Acquisition) the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.07, and which are not released from the Trust Fund
pursuant to any other provision hereof. The Master Servicer shall use reasonable
efforts to realize proceeds from such defaulted Mortgage Loans in such manner as
will maximize the receipt of principal and interest by Certificateholders,
taking into account, among other things, the timing of foreclosure proceedings.
The foregoing is subject to the provisions that, in any case in which Mortgaged
Property shall have suffered damage from an Uninsured Cause, the Master Servicer
shall not be required to expend its own funds toward the restoration of such
property unless it shall determine in its sole discretion (i) that such
restoration will increase the net proceeds of liquidation of the related
Mortgage Loan to Certificateholders after reimbursement to itself for such
expenses, and (ii) that such expenses will be recoverable by the Master Servicer
through Insurance Proceeds or Liqui dation Proceeds from the related Mortgaged
Property, as contemplated in Section 3.11. The Master Servicer shall be
responsible for all other costs and expenses incurred by it in any such
proceedings; provided, however, that it shall be entitled to reimbursement
thereof from the related property, as contemplated in Section 3.11.
The proceeds of any Cash Liquidation or REO Disposition, as well as
any recovery resulting from a partial collection of Insurance Proceeds or
Liquidation Proceeds or any income from an REO Property, will be applied in the
following order of priority: first, to reimburse the Master Servicer or any
Sub-Servicer for any related unreimbursed Servicing Advances, pursuant to
Section 3.11(vi) or 3.22; second, to accrued and unpaid interest on the Mortgage
Loan or REO Imputed Interest, at the Mortgage Rate, to the date of the Cash
Liquidation or REO Disposition, or to the Due Date prior to the Distribution
Date on which such amounts are to be distributed if not in connection with a
Cash Liquidation or REO Disposition; and third, as a recovery of principal of
the Mortgage Loan. If the amount of the recovery so allocated to interest is
less than a full recovery thereof, that amount will be allocated as follows:
first, to unpaid Servicing Fees; and second, to interest at the Net Mortgage
Rate. The portion of the recovery so allocated to unpaid Servicing Fees shall be
reimbursed to the Master Servicer or any Sub-Servicer pursuant to Section
3.11(vi). The portions of the recovery so allocated to interest at the Net
Mortgage Rate
-63-
and to principal of the Mortgage Loan shall be applied as follows: first, to
reimburse the Master Servicer or any Sub-Servicer for any related unreimbursed
Advances in accordance with Section 3.11(iii) or 3.22, and second, for
distribution in accordance with the provisions of Section 4.01, subject to
Section 3.22 with respect to certain recoveries from an REO Disposition
constituting Excess Proceeds.
SECTION 3.16. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full shall be escrowed in a
manner customary for such purposes, the Master Servicer will immediately notify
the Trustee by a certification (which certification shall include a statement to
the effect that all amounts received or to be received in connection with such
payment which are required to be deposited in the Custodial Account pursuant to
Section 3.10 have been or will be so deposited) of a Servicing Officer and shall
request delivery to it of the Mortgage File in the form of the Request for
Release attached hereto as Exhibit F-2. Upon receipt of such certification and
request, the Trustee shall promptly release the related Mortgage File to the
Master Servicer. Subject to the receipt by the Master Servicer of the proceeds
of such payment in full and the payment of all related fees and expenses, the
Master Servicer shall arrange for the release to the Mortgagor of the original
cancelled Mortgage Note. All other documents in the Mortgage File shall be
retained by the Master Servicer to the extent required by applicable law. The
Master Servicer shall provide for preparation of the appropriate instrument of
satisfaction covering any Mortgage Loan which pays in full and the Trustee shall
cooperate in the execution and return of such instrument to provide for its
delivery or recording as may be required. No expenses incurred in connection
with any instrument of satisfaction or deed of reconveyance shall be chargeable
to the Custodial Account or the Certificate Account.
From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loan, the Trustee shall, upon
request of the Master Servicer and delivery to the Trustee of a Request for
Release in the form attached hereto as Exhibit F-1, release the related Mortgage
File to the Master Servicer, and the Trustee shall execute such documents as the
Master Servicer shall prepare and request as being necessary to the prosecution
of any such proceedings. Such Request for Release shall obligate the Master
Servicer to return each document previously requested from the Mortgage File to
the Trustee when the need therefor by the Master Servicer no longer exists; and
in any event within 21 days of the Master Servicer's receipt thereof, unless the
Mortgage Loan has been liquidated and the Liquidation Proceeds relating to the
Mortgage Loan have been deposited in the Custodial Account or the Mortgage 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 Property
either judicially or non-judicially, and the Master Servicer has delivered to
the Trustee a certificate of a Servicing Officer certifying as to the name and
address of the Person
-63-
to which such Mortgage File or such document was delivered and the purpose or
purposes of such delivery. Upon receipt of a Request for Release stating that
such Mortgage Loan was liquidated and that all amounts received or to be
received in connection with such liquidation which are required to be deposited
into the Custodial Account have been or will be so deposited, or that such
Mortgage Loan has become an REO Property, a copy of the Request for Release
shall be released by the Trustee to the Master Servicer.
Upon written request of a Servicing Officer, the Trustee shall
execute and deliver to the Master Servicer any court pleadings, requests for
trustee's sale or other documents prepared by the Master Servicer that are
necessary to the foreclosure or trustee's sale in respect of a Mortgaged
Property or to any legal action brought to obtain judgment against any Mortgagor
on the Mortgage Note or Mortgage or to obtain a deficiency judgment, or to
enforce any other remedies or rights provided by the Mortgage Note or Mortgage
or otherwise available at law or in equity. Each such request that such
pleadings or documents be executed by the Trustee shall include a certification
signed by a Servicing Officer 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 Mortgage, except for the
termination of such a lien upon com pletion of the foreclosure or trustee's
sale.
SECTION 3.17. Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer
shall be entitled to withhold and retain, from deposits to the Custodial Account
of amounts representing payments or recoveries of interest, the Servicing Fees
with respect to each Mortgage Loan (less any portion of such amounts retained by
any Sub-Servicer). In addition, the Master Servicer shall be entitled to recover
unpaid Servicing Fees out of related Late Collections to the extent permitted in
Section 3.11.
The Master Servicer also shall be entitled pursuant to Section 3.11
to receive from the Custodial Account and the Certificate Account as additional
servicing compensation interest or other income earned on deposits therein,
subject to Section 3.23, as well as any prepayment charges, assumption fees,
late payment charges and reconveyance fees. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including payment of the premiums for any blanket policy
insuring against hazard losses pursuant to Section 3.13, servicing compensation
of the Sub-Servicer to the extent not retained by it and the fees and expenses
of the Trustee), and shall not be entitled to reimbursement therefor except as
specifically provided in Section 3.11. The Servicing Fee may not be transferred
in whole or in part except in connection with the transfer of all of the Master
Servicer's responsibilities and obligations under this Agreement.
SECTION 3.18. Maintenance of Certain Servicing Policies.
-65-
The Master Servicer shall obtain and maintain at its own expense and
for the duration of this Agreement a blanket fidelity bond and shall cause each
Sub-Servicer to obtain and maintain an errors and omissions insurance policy
covering such Sub-Servicer's officers, employees and other persons acting on its
behalf in connection with its activities under this Agreement. The amount of
coverage shall be at least equal to the coverage maintained by the Master
Servicer in order to be acceptable to FNMA or FHLMC to service loans for it or
otherwise in an amount as is commercially available at a cost that is generally
not regarded as excessive by industry standards. The Master Servicer shall
promptly notify the Trustee of any material change in the terms of such bond or
policy. The Master Servicer shall provide annually to the Trustee a certificate
of insurance that such bond and policy are in effect. If any such bond or policy
ceases to be in effect, the Master Servicer shall, to the extent possible, give
the Trustee ten days' notice prior to any such cessation and shall use its
reasonable best efforts to obtain a comparable replacement bond or policy, as
the case may be.
SECTION 3.19. Annual Statement as to Compliance.
Within 120 days after December 31 of each year, commencing December
1998, the Master Servicer at its own expense shall deliver to the Trustee, with
a copy to the Rating Agencies, a certificate signed by a Servicing Officer
stating, as to the signers thereof, that (i) a review of the activities of the
Master Servicer during the preceding calendar year and of performance under this
Agreement has been made under such officers' supervision, (ii) to the best of
such officers' knowledge, based on such review, the Master Servicer has
fulfilled all its obligations under this Agreement for such year, or, if there
has been a default in the fulfillment of any such obligation, specifying each
such default known to such officer and the nature and status thereof including
the steps being taken by the Master Servicer to remedy such default; (iii) a
review of the activities of each Sub-Servicer during the Sub-Servicer's most
recently ended fiscal year on or prior to such December 31 and its performance
under its Sub-servicing Agreement has been made under such officer's
supervision; and (iv) to the best of the Servicing Officer's knowledge, based on
his review and the certification of an officer of the Sub-Servicer (unless the
Servicing Officer has reason to believe that reliance on such certification is
not justified), either each Sub-Servicer has performed and fulfilled its duties,
responsibilities and obligations under this Agreement and its Sub-servicing
Agreement in all material respects throughout the year, or, if there has been a
default in performance or fulfillment of any such duties, responsibilities or
obligations, specifying the nature and status of each such default known to the
Servicing Officer. Copies of such statements shall be provided by the Master
Servicer to the Certificateholders upon request or by the Trustee at the expense
of the Master Servicer should the Master Servicer fail to provide such copies.
-66-
SECTION 3.20. Annual Independent Public Accountants' Servicing
Statement.
(a) Within 120 days after December 31 of each year, commencing
December, 1998, the Master Servicer, at its expense, shall cause a firm of
independent public accountants who are members of the American Institute of
Certified Public Accountants to furnish a statement to the Master Servicer,
which will be provided to the Trustee and the Rating Agencies, to the effect
that, in connection with the firm's examination of the Master Servicer's
financial statements as of the end of such calendar year, nothing came to their
attention that indicated that the Master Servicer was not in compliance with the
provisions of this Agreement except for (i) such exceptions as such firm
believes to be immaterial and (ii) such other exceptions as are set forth in
such statement.
(b) Within 120 days after December 31 of each year, commencing
December 1998, the Master Servicer, at its expense, shall or shall cause each
Sub-Servicer to cause a nationally recognized firm of independent certified
public accountants to furnish to the Master Servicer or such Sub-Servicer a
report stating that (i) it has obtained a letter of representation regarding
certain matters from the management of the Master Servicer or such Sub-Servicer
which includes an assertion that the Master Servicer or such Sub-Servicer has
complied with certain minimum mortgage loan servicing standards (to the extent
applicable to commercial and multifamily mortgage loans) identified in the
Uniform Single Attestation Program for Mortgage Bankers established by the
Mortgage Bankers Association of America with respect to the servicing of first
and second lien conventional single family mortgage loans during the most
recently completed calendar year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the American
Institute of Certified Public Accountants, such representation is fairly stated
in all material respects, subject to such exceptions and other qualifications
that may be appropriate. Immediately upon receipt of such report, the Master
Servicer shall or shall cause each Sub-Servicer to furnish a copy of such report
to the Trustee and the Rating Agencies.
SECTION 3.21. Access to Certain Documentation.
The Master Servicer shall provide, and shall cause any Sub-Servicer
to provide, to the Trustee, access to the documentation regarding the related
Mortgage Loans and REO Property and to the Certificateholders, the FDIC, and the
supervisory agents and examiners of the FDIC (to which the Trustee shall also
provide) access to the documentation regarding the related Mortgage Loans
required by applicable regulations, such access being afforded without charge
but only upon reasonable request and during normal business hours at the offices
of the Master Servicer or the Sub-Servicers that are designated by these
entities; PROVIDED, HOWEVER, that, unless otherwise required by law, the
Trustee, the Master Servicer or the Sub-Servicer shall not be required to
provide access to such documentation if the provision thereof would violate the
legal
-67-
right to privacy of any Mortgagor; PROVIDED, FURTHER, HOWEVER, that the Trustee
shall coordinate its requests for such access so as not to impose an
unreasonable burden on, or cause an unreasonable interruption of, the business
of the Master Servicer or any Sub-Servicer. The Master Servicer, the
Sub-Servicers and the Trustee shall allow representatives of the above entities
to photocopy any of the documentation and shall provide equipment for that
purpose at a charge that covers their own actual out-of-pocket costs.
SECTION 3.22. Title, Conservation and Disposition of REO Property.
This Section shall apply only to REO Properties acquired for the
account of REMIC I and shall not apply to any REO Property relating to a
Mortgage Loan which was purchased or repurchased from REMIC I pursuant to
Sections 2.02, 2.04, 3.14 or 3.24. In the event that title to any such REO
Property is acquired, the deed or certificate of sale shall be issued to the
Trustee, or to its nominee, on behalf of the Certificateholders. The Master
Servicer, on behalf of REMIC I, shall either sell any REO Property before the
close of the third taxable year following the taxable year in which REMIC I
acquires ownership of such REO Property for purposes of Section 860G(a)(8) of
the Code or, at the expense of REMIC I, request, more than 60 days before the
day on which the three-year grace period would otherwise expire an extension of
the three-year grace period, unless the Master Servicer has delivered to the
Trustee an Opinion of Counsel, addressed to the Trustee and the Master Servicer,
to the effect that the holding by REMIC I of such REO Property subsequent to
three years after its acquisition will not result in the imposition on REMIC I
of taxes on "prohibited transactions" thereof, as defined in Section 860F of the
Code, or cause either REMIC I or REMIC II to fail to qualify as a REMIC under
the REMIC Provisions or comparable provisions of the laws of the State of
California at any time that any Certificates are outstanding. The Master
Servicer shall manage, conserve, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) or result in the
receipt by either REMIC I or REMIC II of any "income from non-permitted assets"
within the meaning of Section 860F(a)(2)(B) of the Code or any "net income from
foreclosure property" which is subject to taxation under the REMIC Provisions.
Pursuant to its efforts to sell such REO Property, the Master Servicer shall
either itself or through an agent selected by the Master Servicer protect and
conserve such REO Property in the same manner and to such extent as is customary
in the locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Certificateholders, rent the
same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Certificateholders for the period prior to the sale of such REO
Property.
Any REO Disposition shall be for cash only (unless changes in the
REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration).
-68-
The Master Servicer shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and apart
from its own funds and general assets. The Master Servicer shall deposit, or
cause to be deposited, on a daily basis in the Custodial Account all revenues
received with respect to the REO Properties, net of any directly related
expenses incurred or withdraw therefrom funds necessary for the proper
operation, management and maintenance of the REO Property.
If as of the date of acquisition of title to any REO Property there
remain outstanding unreimbursed Servicing Advances with respect to such REO
Property or any outstanding Advances allocated thereto the Master Servicer, upon
an REO Disposition, shall be entitled to reimbursement for any related
unreimbursed Servicing Advances and any unreimbursed related Advances as well as
any unpaid Servicing Fees from proceeds received in connection with the REO
Disposition, as further provided in Section 3.15.
The REO Disposition shall be carried out by the Master Servicer at
such price and upon such terms and conditions as the Master Servicer shall
determine.
The Master Servicer shall deposit the proceeds from the REO
Disposition, net of any payment to the Master Servicer as provided above, in the
Custodial Account upon receipt thereof for distribution in accordance with
Section 4.01; provided, that any such net proceeds received by the Master
Servicer which are in excess of the applicable Stated Principal Balance plus all
unpaid REO Imputed Interest thereon through the last day of the month in which
the REO Disposition occurred ("Excess Proceeds") shall be retained by the Master
Servicer as additional servicing compensation.
With respect to any Mortgage Loan as to which the Master Servicer
has received notice of, or has actual knowledge of, the presence of any toxic or
hazardous substance on the Mortgaged Property, the Master Servicer shall not, on
behalf of the Trustee, either (i) obtain title to the related Mortgaged Property
as a result of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire
possession of, the related Mortgaged Property, unless the Master Servicer has,
at least 30 days prior to taking such action, obtained and delivered to the
Trustee an environmental audit report prepared by a Person who regularly
conducts environmental audits using customary industry standards. The Master
Servicer shall take such action as it deems to be in the best economic interest
of the Trust Fund (other than proceeding against the Mortgaged Property) and is
hereby authorized at such time as it deems appropriate to release such Mortgaged
Property from the lien of the related Mortgage.
The cost of the environmental audit report contemplated by this
Section 3.22 shall be advanced by the Master Servicer as an expense of the Trust
Fund, and the Master Servicer shall be reimbursed therefor from the Custodial
Account as provided in Section 3.11, any such right
-69-
of reimbursement being prior to the rights of the Certificateholders to receive
any amount in the Custodial Account.
If the Master Servicer determines, as described above, that it is in
the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property in compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund. The cost of any such compliance,
containment, clean-up or remediation shall be advanced by the Master Servicer as
an expense of the Trust Fund, and the Master Servicer shall be entitled to be
reimbursed therefor from the Custodial Account as provided in Section 3.11, any
such right of reimbursement being prior to the rights of the Certificateholders
to receive any amount in the Custodial Account.
SECTION 3.23. Additional Obligations of the Master Servicer.
On each Certificate Account Deposit Date, the Master Servicer shall
deliver to the Trustee for deposit in the Certificate Account from its own funds
and without any right of reimbursement therefor, a total amount equal to the
amount of Compensating Interest for the related Distribution Date.
SECTION 3.24 Optional Purchase of Defaulted Mortgage Loans.
The Master Servicer or any affiliate of the Master Servicer, in its
sole discretion, shall have the right to elect (by written notice sent to the
Master Servicer, and the Trustee), but shall not be obligated, to purchase for
its own account from the Trust Fund any Mortgage Loan which is 90 days or more
delinquent in the manner and at the price specified in Section 2.04. The
purchase price for any Mortgage Loan purchased hereunder shall be deposited in
the Certificate Account and the Trustee, upon receipt of such deposit, shall
release or cause to be released to the purchaser of such Mortgage Loan the
related Mortgage File and shall execute and deliver such instruments of transfer
or assignment prepared by the purchaser of such Mortgage Loan, in each case
without recourse, as shall be necessary to vest in the purchaser of such
Mortgage Loan any Mortgage Loan released pursuant hereto and the purchaser of
such Mortgage Loan shall succeed to all the Trustee's right, title and interest
in and to such Mortgage Loan and all security and documents related thereto.
Such assignment shall be an assignment outright and not for security. The
purchaser of such Mortgage Loan shall thereupon own such Mortgage Loan, and all
security and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
SECTION 3.25. Additional Obligations of the Depositor.
-70-
The Depositor agrees that on or prior to the tenth day after the
Closing Date, the Depositor shall provide the Trustee with a written
notification, substantially in the form of Exhibit K attached hereto, relating
to each Class of Certificates, setting forth (i) in the case of each Class of
such Certificates, (a) if less than 10% of the aggregate Certificate Principal
Balance of such Class of Certificates has been sold as of such date, the value
calculated pursuant to clause (b)(iii) of Exhibit K hereto, or, (b) if 10% or
more of such Class of Certificates has been sold as of such date but no single
price is paid for at least 10% of the aggregate Certificate Principal Balance of
such Class of Certificates, then the weighted average price at which the
Certificates of such Class were sold and the aggregate percentage of
Certificates of such Class sold, (c) the first single price at which at least
10% of the aggregate Certificate Principal Balance of such class of Certificates
was sold, or (d) if any Certificates of each Class of Certificates are retained
by the Depositor or an affiliate corporation, or are delivered to the Seller,
the fair market value of such Certificates as of the Closing Date, (ii) the SPA
used in pricing the Certificates, and (iii) such other information as to matters
of fact as the Trustee may reasonably request to enable it to comply with its
reporting requirements with respect to each Class of such Certificates to the
extent such information can in the good faith judgment of the Depositor be
determined by it.
-71-
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Certificate Account; Distributions.
(a) The Trustee shall establish and maintain a Certificate Account,
in which the Master Servicer shall cause to be deposited on behalf of the
Trustee on or before 5:00 P.M. New York time on each Certificate Account Deposit
Date by wire transfer of immediately available funds an amount equal to the sum
of (i) any Advance for the immediately succeeding Distribution Date, (ii) any
amount required to be deposited in the Certificate Account pursuant to Sections
3.11, 3.13, 3.22 or 3.23 and (iii) all other amounts constituting the Available
Distribution Amount for the immediately succeeding Distribution Date.
(b) On each Distribution Date, prior to making any other
distributions referred to in Section 4.01, the Trustee shall withdraw from the
Certificate Account and pay itself the Trustee's Fee for such Distribution Date.
(c) On each Distribution Date the Trustee shall distribute to each
Certificateholder of record as of the next preceding Record Date (other than as
provided in Section 9.01 respecting the final distribution) either in
immediately available funds (by wire transfer or otherwise) to the account of
such Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has so notified the Trustee at least 5
Business Days prior to the related Record Date and such Certificateholder is the
registered owner of Certificates the aggregate Initial Certificate Principal
Balance of which is not less than $2,500,000, or otherwise by check mailed to
such Certificateholder at the address of such Holder appearing in the
Certificate Register, such Certificateholder's share (based on the aggregate of
the Percentage Interests represented by Certificates of the applicable Class
held by such Holder) of the following amounts, in the following order of
priority, in each case to the extent of the remaining Available Distribution
Amount:
(i) to the Class A Certificateholders and the Class R
Certificateholders, on a pro rata basis based on Accrued
Certificate Interest payable on such Certificates with respect to
such Distribution Date, Accrued Certificate Interest on such
Classes of Certificates, as applicable, for such Distribution
Date, plus any Accrued Certificate Interest thereon remaining
unpaid from any previous Distribution Date (the "Senior Interest
Distribution Amount");
(ii) to the Class A Certificateholders (other than the
Interest Only Certificateholders) and Class R Certificateholders,
in the priorities and amounts set forth in Section 4.01(d) and
(e), the sum of the following (applied to reduce the
-72-
Certificate Principal Balances of such Class A Certificates or Class R
Certificates, as applicable):
(A) the Senior Percentage for such Distribution Date
times the sum of the following:
(1) the principal portion of each Monthly Payment
due during the related Due Period on each Outstanding
Mortgage Loan whether or not received on or prior to
the related Determination Date, minus the principal
portion of any Debt Service Reduction which together
with other Bankruptcy Losses exceeds the Bankruptcy
Amount;
(2) the Stated Principal Balance of any Mortgage
Loan repurchased during the related Prepayment Period
pursuant to Section 2.02, 2.04, 3.14 or 3.24 and the
amount of any shortfall deposited in the Custodial
Account in connection with the substitution of a
Deleted Mortgage Loan pursuant to Section 2.04 during
the related Prepayment Period; and
(3) the principal portion of all other unscheduled
collections (other than Principal Prepayments in Full
and Curtailments and amounts received in connection
with a Cash Liquidation or REO Disposition of a
Mortgage Loan described in Section 4.01(c)(ii)(B),
including without limitation Insurance Proceeds,
Liquidation Proceeds and REO Proceeds) received during
the related Prepayment Period to the extent applied by
the Master Servicer as recoveries of principal of the
related Mortgage Loan pursuant to Section 3.15;
(B) with respect to each Mortgage Loan for which a Cash
Liquidation or a REO Disposition occurred during the related
Prepayment Period and did not result in any Excess Special
Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses
or Extraordinary Losses, an amount equal to the lesser of
(a) the Senior Percentage for such Distribution Date times
the Stated Principal Balance of such Mortgage Loan and (b)
the Senior Accelerated Distribution Percentage for such
Distribution Date times the related unscheduled collections
(including without limitation Insurance Proceeds,
Liquidation Proceeds and REO Proceeds) to the extent applied
by the Master Servicer as recoveries of principal of the
related Mortgage Loan pursuant to Section 3.15;
-73-
(C) the Senior Accelerated Distribution Percentage for
such Distribution Date times the aggregate of all Principal
Prepayments in Full and Curtailments received in the related
Prepayment Period; and
(D) any amounts described in subsection (ii), clauses
(A), (B) or (C) of this Section 4.01(c), as determined for
any previous Distribution Date, which remain unpaid after
application of amounts previously distributed pursuant to
this clause (D) to the extent that such amounts are not
attributable to Realized Losses which have been allocated to
the Class M Certificates or Class B Certificates;
(iii) to the Holders of the Class M-1 Certificates, the
Accrued Certificate Interest thereon for such Distribution Date,
plus any Accrued Certificate Interest thereon remaining unpaid
from any previous Distribution Date, except as provided below;
(iv) to the Holders of the Class M-1 Certificates, an amount
equal to the Subordinate Principal Distribution Amount for such
Class of Certificates for such Distribution Date;
(v) to the Holders of the Class M-2 Certificates, the
Accrued Certificate Interest thereon for such Distribution Date,
plus any Accrued Certificate Interest thereon remaining unpaid
from any previous Distribution Date, except as provided below;
(vi) to the Holders of the Class M-2 Certificates, an amount
equal to the Subordinate Principal Distribution Amount for such
Class of Certificates for such Distribution Date;
(vii) to the Holders of the Class M-3 Certificates, the
Accrued Certificate Interest thereon for such Distribution Date,
plus any Accrued Certificate Interest thereon remaining unpaid
from any previous Distribution Date, except as provided below;
(viii) to the Holders of the Class M-3 Certificates, an
amount equal to (x) the Subordinate Principal Distribution Amount
for such Class of Certificates for such Distribution Date;
(ix) to the Holders of the Class B-1 Certificates, the
Accrued Certificate Interest thereon for such Distribution Date,
plus any Accrued Certificate Interest
-74-
thereon remaining unpaid from any previous Distribution Date,
except as provided below;
(x) to the Holders of the Class B-1 Certificates, an amount
equal to the Subordinate Principal Distribution Amount for such
Class of Certificates for such Distribution Date;
(xi) to the Holders of the Class B-2 Certificates, the
Accrued Certificate Interest thereon for such Distribution Date,
plus any Accrued Certificate Interest thereon remaining unpaid
from any previous Distribution Date, except as provided below;
(xii) to the Holders of the Class B-2 Certificates, an
amount equal to the Subordinate Principal Distribution Amount for
such Class of Certificates for such Distribution Date;
(xiii) to the Holders of the Class B-3 Certificates, an
amount equal to (x) the Accrued Certificate Interest thereon for
such Distribution Date, plus any Accrued Certificate Interest
thereon remaining unpaid from any previous Distribution Date,
except as provided below;
(xiv) to the Holders of the Class B-3 Certificates, an
amount equal to (x) the Subordinate Principal Distribution Amount
for such Class of Certificates for such Distribution Date;
(xv) to the Class A Certificateholders and Class R
Certificateholders in the priority set forth in Section 4.01(d),
the portion, if any, of the Available Distribution Amount
remaining after the foregoing distributions, applied to reduce
the Certificate Principal Balances of such Class A and Class R
Certificates, but in no event more than the aggregate of the
outstanding Certificate Principal Balances of each such Class of
Class A and Class R Certificates, and thereafter, to each Class
of Class M Certificates then outstanding beginning with such
Class with the lowest numerical designation, any portion of the
Available Distribution Amount remaining after the Class A
Certificates and Class R Certificates have been retired, applied
to reduce the Certificate Principal Balance of each such Class of
Class M Certificates, but in no event more than the outstanding
Certificate Principal Balance of each such Class of Class M
Certificates; and thereafter to each such Class of Class B
Certificates then outstanding beginning with such Class with the
lowest numerical designation, any portion of the Available
Distribution Amount remaining after the Class M Certificates have
been retired, applied to reduce the Certificate Principal Balance
of each such Class of Class B Certificates, but in no event more
-75-
than the outstanding Certificate Principal Balance of each such
Class of Class B Certificates; and
(xvi) to the Class R Certificateholders, the balance, if
any, of the Available Distribution Amount.
(d) Distributions of principal on the Class A Certificates (other
than the Interest Only Certificates) and Class R Certificates on each
Distribution Date occurring prior to the occurrence of the Credit Support
Depletion Date will be made as follows:
(i) first, from the Senior Principal Distribution Amount, to
the Lockout Certificates in reduction of the Certificate
Principal Balances thereof, until the Certificate Principal
Balances thereof have been reduced to zero, an amount equal to
the Lockout Percentage of such Certificates' pro rata share
(based on the aggregate Certificate Principal Balances thereof
relative to the aggregate Certificate Principal Balance of all
classes of Certificates of the aggregate of the amounts described
in clauses (1), (2) and (3) of Section 4.01(c)(ii)(A) (but
without application of either the Senior Percentage or the Senior
Accelerated Distribution Percentage described therein) shall be
distributed to such Lockout Certificates; provided that if the
aggregate of the amounts set forth in clauses (1), (2) and (3) of
Section 4.01(c)(ii)(A) is more than the balance of the Available
Distribution Amount remaining after the Senior Interest
Distribution Amount has been distributed, the amount paid to such
Certificates pursuant to this clause (ii) shall be reduced by an
amount equal to such Certificates' pro rata share, based on the
aggregate Certificate Principal Balance thereof relative to the
aggregate Certificate Principal Balance of the Senior
Certificates of such difference;
(ii) second, an amount equal to the sum of (a) the balance
of the Senior Principal Distribution Amount remaining after the
distributions described in clause (i) above, (b) the Class A-3
Accrual Distribution Amount and (c) the Class A-9 Accrual
Distribution Amount shall be distributed concurrently as follows:
(A) first, the sum of (▇) ▇▇.▇▇▇▇▇▇▇▇▇▇▇▇% of such balance
of the Senior Principal Distribution Amount and (y) the
Class A-3 Accrual Distribution Amount shall be distributed
as follows:
(1) first, to the Class R-I Certificates until the
Certificate Principal Balance thereof has been reduced
to zero;
(2) second, to the Class A-1 Certificates up to the
aggregate amount necessary to reduce the outstanding
Certificate Principal
-76-
Balance of the Class A-1 Certificates to its Scheduled
Principal Balance (as set forth in the table below
entitled "Scheduled Principal Balances and Targeted
Principal Balances") for such Distribution Date;
(3) third, to the Scheduled Accrual Certificates up to
the aggregate amount necessary to reduce the
outstanding Certificate Principal Balance of the
Scheduled Accrual Certificates to its Scheduled
Principal Balance;
(4) fourth, on a pro rata basis to the Class A-1
Certificates and the Scheduled Accrual Certificates,
based on the Certificate Principal Balances thereof,
without regard to the Scheduled Principal Balances
thereof, in reduction of the Certificate Principal
Balances thereof, until such Certificate Balances have
been reduced to zero;
(5) fifth, on a pro rata basis to the Class A-4
Certificates and the Class A-5 Certificates, based on
the Certificate Principal Balances thereof, until the
Certificate Principal Balances thereof have been
reduced to zero;
(6) sixth, to the Lockout Certificates until the
Certificate Principal Balance thereof has been reduced
to zero; and
(B) second, the sum of (▇) ▇▇.▇▇▇▇▇▇▇▇▇▇▇▇% of such balance
of the Senior Principal Distribution Amount and (y) the
Class A-9 Accrual Distribution Amount shall be distributed
as follows:
(1) first, to the Class R-II Certificates until the
Certificate Principal Balance thereof has been reduced
to zero;
(2) second, to the Class A-7 Certificates up to the
aggregate amount necessary to reduce the outstanding
Certificate Principal Balance of the Class A-7
Certificates to its Targeted Principal Balance (as set
forth in the table below entitled "Scheduled Principal
Balances and Targeted Principal Balances") for such
Distribution Date, until the Certificate Principal
Balance of the Class A-7 Certificates is reduced to
$17,286,000;
-77-
(3) third, 25.731261425960% and 74.268738574040%,
respectively, of the amount remaining after
distributions pursuant to clause (2) above, to the
Class A-7 Certificates and Class A-6 Certificates,
respectively, up to the aggregate amount necessary to
reduce the outstanding Certificate Principal Balances
of the Class ▇- ▇ Certificates and Class A-7
Certificates to their respective Targeted Principal
Balances;
(4) fourth, on a pro rata basis to the Class A-7
Certificates and Class A-8 Certificates, based on the
Certificate Principal Balances thereof, up to the
aggregate amount necessary to reduce the outstanding
Certificate Principal Balances of the Class A-7
Certificates and Class A-8 Certificates to their
respective Targeted Principal Balances for such
Distribution Date;
(5) fifth, to the Class A-9 Certificates, until the
Certificate Principal Balance of the Class A-9
Certificates has been reduced to zero;
(6) sixth, to the Class A-7 Certificates, without
regard to its Targeted Principal Balance, until the
Certificate Principal Balance of the Class A-7
Certificates is reduced to $17,286,000;
(7) seventh, 25.731261425960% and 74.268738574040% of
the amount remaining after distributions pursuant to
clause (6) above, to the Class A-7 Certificates and the
Class A-6 Certificates, respectively, without regard to
the Targeted Principal Balances thereof, until the
Certificate Principal Balance of the Class A-6
Certificates has been reduced to zero;
(8) eighth, on a pro rata basis to the Class A-8
Certificates and Class A-7 Certificates, based on the
Certificate Principal Balances thereof, without regard
to the Targeted Principal Balances thereof, until the
Certificate Principal Balances thereof have been
reduced to zero;
(9) ninth, to the Lockout Certificates until the
Certificate Principal Balance thereof has been reduced
to zero; and
(e) On or after the occurrence of the Credit Support Depletion Date,
all priorities relating to distributions as described above in respect of
principal among the Senior
-78-
Certificates will be disregarded and the Senior Principal Distribution Amount
will be distributed to the Senior Certificates pro rata in accordance with their
respective outstanding Certificate Principal Balances and the Senior Interest
Distribution Amount will be distributed as set forth in
Section 4.01(c)(i) above;
(f) On each Distribution Date prior to the Class A-3 Accretion
Termination Date, an amount equal to the Accrued Certificate Interest on the
Class A-3 Certificates for such date (the "Class A-3 Accrual Distribution
Amount") shall be added to the Certificate Principal Balance of such
Certificate; provided that if the Class A-3 Accretion Termination Date is the
Credit Support Depletion Date, the entire amount of Accrued Certificate Interest
on the Class A-3 Certificates for such Distribution Date will be paid to the
Holders of the Class A-3 Certificates. If the Class A-3 Accretion Termination
Date is the Credit Support Depletion Date, the entire Class A-3 Accrual
Distribution Amount for such date will be payable to the Holders of the Class
A-3 Certificates, in reduction of the Certificate Principal Balance thereof.
(g) On each Distribution Date prior to the Class A-9 Accretion
Termination Date, an amount equal to the Accrued Certificate Interest that would
otherwise be distributed on the Class A-9 Certificates (the "Class A-9 Accrual
Distribution Amount") shall be added to the Certificate Principal Balance of
such Certificate; provided that if the Class A-9 Accretion Termination Date is
the Credit Support Depletion Date, the entire amount of Accrued Certificate
Interest on the Class A-9 Certificates for such Distribution Date will be paid
to the Holders of the Class A-9 Certificates. If the Class A-9 Accretion
Termination Date is the Credit Support Depletion Date, the entire Class A-9
Accrual Distribution Amount for such date will be payable to the Holders of the
Class A-9 Certificates, in reduction of the Certificate Principal Balance
thereof.
(h) Each distribution with respect to a Book-Entry Certificate shall
be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the Depositor
or the Master Servicer shall have any responsibility therefor except as
otherwise provided by this Agreement or applicable law.
(i) The Trustee shall, upon written direction from the Master
Servicer, invest or cause the institution maintaining the Certificate Account to
invest the funds in the Certificate Account in Permitted Investments designated
in the name of the Trustee for the benefit of the Certificateholders, which
shall mature not later than the Business Day next preceding the Distribution
Date next following the date of such investment (except that (i) any investment
in the
-79-
institution with which the Certificate Account is maintained may mature on such
Distribution Date and (ii) any other investment may mature on such Distribution
Date if the Trustee shall advance funds on such Distribution Date to the
Certificate Account in the amount payable on such investment on such
Distribution Date, pending receipt thereof to the extent necessary to make
distributions on the Certificates) and shall not be sold or disposed of prior to
maturity. All income and gain realized from any such investment shall be for the
benefit of the Master Servicer and shall be subject to its withdrawal or order
from time to time. The amount of any losses incurred in respect of any such
investments shall be deposited in the Certificate Account by the Master Servicer
out of its own funds immediately as realized without any right of reimbursement.
(j) Except as otherwise provided in Section 9.01, if the Master
Servicer anticipates that a final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Master Servicer
shall, no later than the Determination Date in the month of such final
distribution, notify the Trustee and the Trustee shall, no later than two (2)
Business Days after such Determination Date, mail on such date to each Holder of
such Class of Certificates a notice to the effect that: (i) the Trustee
anticipates that the final distribution with respect to such Class of
Certificates will be made on such Distribution Date but only upon presentation
and surrender of such Certificates at the office of the Trustee or as otherwise
specified therein, and (ii) no interest shall accrue on such Certificates from
and after the end of the prior calendar month.
Any funds not distributed to any Holder or Holders of Certificates
of such Class on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust and credited to the account of the appropriate non-tendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to this
Section 4.01(j) shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Trustee shall mail a second
notice to the remaining non- tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within six months after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee shall
take reasonable steps as directed by the Depositor, or appoint an agent to take
reasonable steps, to contact the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in the Trust Fund. If within nine months
after the second notice any such Certificates shall not have been surrendered
for cancellation, the Class R Certificateholders shall be entitled to all
unclaimed funds and other assets which remain subject hereto. No interest shall
accrue or be payable to any Certificateholder on any amount held in trust as a
result of such Certificateholder's failure to surrender its Certificate(s) for
final payment thereof in accordance with this Section 4.01(j).
-80-
SECTION 4.02. Statements to Certificateholders.
On each Distribution Date the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Certificate and to the Depositor, the
Master Servicer and the Rating Agencies, a statement based on information
provided by the Master Servicer as to such distribution setting forth:
(i) (a) the amount of such distribution to the Certificateholders of
each Class applied to reduce the Certificate Principal Balance thereof, and
(b) the aggregate amount included therein representing Principal
Prepayments;
(ii) the amount of such distribution to Holders of each Class of
Certificates allocable to interest;
(iii) if the distribution to the Holders of any Class of Certificates
is less than the full amount that would be distributable to such Holders if
there were sufficient funds available therefor, the amount of the
shortfall;
(iv) the aggregate amount of Advances included in such distribution as
of the close of business on such Distribution Date;
(v) the number and aggregate Stated Principal Balance of the Mortgage
Loans at the close of business on such Distribution Date;
(vi) the aggregate Certificate Principal Balance of each Class of
Certificates, and each of the Senior, Class M and Class B Percentages,
after giving effect to the amounts distributed on such Distribution Date,
separately identifying any reduction thereof due to Realized Losses other
than pursuant to an actual distribution of principal;
(vii) the related Subordinate Principal Distribution Amount and
Prepayment Distribution Percentage, if applicable;
(viii) the number and aggregate Stated Principal Balance of Mortgage
Loans (a) delinquent 31 to 60 days, (b) delinquent 61 to 90 days, (c)
delinquent 91 days or more;
(ix) the number, aggregate principal balance and book value of any REO
Properties;
(x) the aggregate Accrued Certificate Interest remaining unpaid, if
any, for each Class of Certificates, after giving effect to the
distribution made on such Distribution Date;
-81-
(xi) the Special Hazard Amount, Fraud Loss Amount and Bankruptcy
Amount as of the close of business on such Distribution Date and a
description of any change in the calculation of such amounts;
(xii) the weighted average Pool Strip Rate for such Distribution Date
and the Pass-Through Rate on the Class A-11 Certificates;
(xiii) the occurrence of the Credit Support Depletion Date;
(xiv) the Senior Accelerated Distribution Percentage applicable to
such distribution;
(xv) the Senior Percentage and Lockout Percentage for such
Distribution Date;
(xvi) the aggregate amount of Realized Losses for such Distribution
Date;
(xvii) the aggregate amount of any recoveries on previously foreclosed
loans from the Seller due to a breach of representation or warranty;
(xviii) the weighted average remaining term to maturity of the
Mortgage Loans after giving effect to the amounts distributed on such
Distribution Date; and
(xix) the weighted average Mortgage Rates of the Mortgage Loans after
giving effect to the amounts distributed on such Distribution Date.
In the case of information furnished pursuant to subclauses
(i)-(iii) above, the amounts shall also be expressed as a dollar amount per
Single Certificate.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall prepare and forward, to each Person who at any time
during the calendar year was a Holder of a Senior or Subordinate Certificate, a
statement containing the information set forth in subclauses (i) - (iii) above,
aggregated for such calendar year or applicable portion thereof during which
such person was a Certificateholder. 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 and regulations thereunder as from time to time are in force.
On each Distribution Date the Trustee shall prepare and forward, to
each Holder of a Residual Certificate a copy of the reports forwarded to the
other Certificateholders on such Distribution Date.
-82-
Within a reasonable period of time after the end of each calendar
year, the Trustee shall prepare and forward, to each Person who at any time
during the calendar year was a Holder of a Residual Certificate a statement
containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satis fied 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 4.03. Remittance Reports; Advances by the Master Servicer.
(a) On the Business Day following each Determination Date, the
Master Servicer shall deliver to the Trustee a report, prepared as of the close
of business on the Determination Date (the "Determination Date Report"), in the
form of an electromagnetic tape or disk. The Determination Date Report and any
written information supplemental thereto shall include such information with
respect to the Mortgage Loans that is required by the Trustee for purposes of
making the calculations and preparing the statement described in Sections 4.01
and 4.02, as set forth in written specifications or guidelines issued by the
Trustee from time to time. Not later than 11:00 A.M. California time on each
Certificate Account Deposit Date, the Trustee shall furnish by telecopy to the
Master Servicer a statement setting forth (i) the Available Distribution Amount
and (ii) the amounts required to be withdrawn from the Custodial Account and
deposited into the Certificate Account with respect to the immediately
succeeding Distribution Date pursuant to clause (iii) of Section 4.01(a). The
Trustee shall have no obligation to recompute, recalculate or verify any
information provided to it by the Master Servicer. The determination by the
Trustee of such amounts shall, in the absence of obvious error, be presumptively
deemed to be correct for all purposes hereunder.
(b) Not later than 2:00 P.M. New York time on each Certificate
Account Deposit Date, the Trustee shall notify the Master Servicer of the
aggregate amount of Advances required to be made for the related Distribution
Date, which shall be in an aggregate amount equal to the sum of the aggregate
amount of Monthly Payments (with each interest portion thereof adjusted to the
Mortgage Rate less the Servicing Fee Rate), less the amount of any related Debt
Service Reductions or reductions in the amount of interest collectable from the
Mortgagor pursuant to the Relief Act, on the Outstanding Mortgage Loans as of
the related Due Date, which Monthly Payments were delinquent as of the close of
business as of the related Determination Date; provided that following the
reduction of the Certificate Principal Balances of the Subordinate Certificates
to zero no Advance shall be made if it would be a Nonrecoverable Advance. On or
before 4:00 P.M. New York time on each Certificate Account Deposit Date, the
Master Servicer shall either (i) deposit in the Certificate Account from its own
funds, or funds received therefor from the Sub-Servicers, an amount equal to the
Advances to be made by the Master Servicer in respect of the related
Distribution Date, (ii) withdraw from amounts on deposit in the Custodial
Account and deposit in the Certificate Account all or a portion of the amounts
held for future
-82-
distribution in discharge of any such Advance, or (iii) make advances in the
form of any combination of (i) and (ii) aggregating the amount of such Advance.
Any portion of the amounts held for future distribution so used shall be
replaced by the Master Servicer by deposit in the Certificate Account on or
before 1:00 P.M. New York time on any future Certificate Account Deposit Date to
the extent that funds attributable to the Mortgage Loans that are available in
the Custodial Account for deposit in the Certificate Account on such Certificate
Account Deposit Date shall be less than payments to Certificateholders required
to be made on the following Distribution Date. The amount of any reimbursement
pursuant to Section 3.11 in respect of outstanding Advances on any Distribution
Date shall be allocated to specific Monthly Payments due but delinquent for
previous Due Periods, which allocation shall be made, to the extent practicable,
to Monthly Payments which have been delinquent for the longest period of time.
Such allocations shall be conclusive for purposes of reimbursement to the Master
Servicer from recoveries on related Mortgage Loans pursuant to Section 3.11. The
determination by the Master Servicer that it has made a Nonrecoverable Advance
or that any proposed Advance, if made, would constitute a Nonrecoverable
Advance, shall be evidenced by a certificate of a Servicing Officer delivered to
the Seller and the Trustee with the Determination Date Report. The Trustee shall
deposit all funds it receives pursuant to this Section 4.03 into the Certificate
Account.
(c) In the event that the Master Servicer determines as of any
Certificate Account Deposit Date that it will be unable to deposit in the
Certificate Account an amount equal to the Advance required to be made for the
immediately succeeding Distribution Date in the amount determined by the Trustee
pursuant to paragraph (b) above, it shall give notice to the Trustee of its
inability to Advance (such notice may be given by telecopy), not later than 4:00
P.M., New York time, on such date, specifying the portion of such amount that it
will be unable to deposit. Not later than 4:00 P.M., New York time, on the
earlier of (x) two Business Days following such Certificate Account Deposit Date
or (y) the Business Day preceding the related Distribution Date, unless by such
time the Master Servicer shall have directly or indirectly deposited in the
Certificate Account the entire amount of the Advances required to be made for
the related Distribution Date, pursuant to Section 7.01, the Trustee shall (a)
terminate all of the rights and obligations of the Master Servicer under this
Agreement in accordance with Section 7.01 and (b) assume the rights and
obligations of the Master Servicer hereunder, including the obligation to
deposit in the Certificate Account an amount equal to the Advance for the
immediately succeeding Distribution Date.
SECTION 4.04. Allocation of Realized Losses.
Prior to each Distribution Date, the Master Servicer shall determine
the total amount of Realized Losses, if any, that resulted from any Cash
Liquidation, Debt Service Reduction, Deficient Valuation or REO Disposition that
occurred during the related Prepayment Period. The amount of each Realized Loss
shall be evidenced by an Officers' Certificate. All Realized Losses, other than
Excess Special Hazard Losses, Extraordinary Losses, Excess
-84-
Bankruptcy Losses or Excess Fraud Losses, shall be allocated as follows: first,
to the Class B-3 Certificates until the Certificate Principal Balance thereof
has been reduced to zero; second, to the Class B-2 Certificates until the
Certificate Principal Balance thereof has been reduced to zero; third, to the
Class B-1 Certificates until the Certificate Principal Balance thereof has been
reduced to zero; fourth, to the Class M-3 Certificates until the Certificate
Principal Balance thereof has been reduced to zero; fifth, to the Class M-2
Certificates until the Certificate Principal Balance thereof has been reduced to
zero; sixth, to the Class M-1 Certificates until the Certificate Principal
Balance thereof has been reduced to zero; and thereafter, the entire amount of
such Realized Losses on Mortgage Loans among all the Class A Certificates and
Class R Certificates, on a pro rata basis, as described below. Any Excess
Special Hazard Losses, Excess Bankruptcy Losses, Excess Fraud Losses and
Extraordinary Losses on the Mortgage Loans will be allocated among the Class A,
Class M, Class B and Class R Certificates, on a pro rata basis, as described
below.
As used herein, an allocation of a Realized Loss on a "pro rata basis"
among two or more specified Classes of Certificates means an allocation on a pro
rata basis, among the various Classes so specified, to each such Class of
Certificates on the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on such Distribution
Date in the case of the principal portion of a Realized Loss or based on the
Accrued Certificate Interest thereon payable on such Distribution Date (without
regard to any Compensating Interest for such Distribution Date) in the case of
an interest portion of a Realized Loss. Any allocation of the principal portion
of Realized Losses (other than Debt Service Reductions) to the Class B
Certificates or, after the Certificate Principal Balances of the Class B
Certificates have been reduced to zero, to the Class of Class M Certificates
then outstanding with the highest numerical designation shall be made by
operation of the definition of "Certificate Principal Balance" and by operation
of the provisions of Section 4.01. Allocations of the interest portions of
Realized Losses shall be made by operation of the definition of "Accrued
Certificate Interest" and by operation of the provisions of Section 4.01.
Allocations of the principal portion of Debt Service Reductions shall be made by
operation of the provisions of Section 4.01. All Realized Losses and all other
losses allocated to a Class of Certificates hereunder will be allocated among
the Certificates of such Class in proportion to the Percentage Interests
evidenced thereby.
SECTION 4.05. Information Reports to Be Filed by the Master
Servicer.
The Master Servicer or the Sub-Servicers shall file information
reports with respect to the receipt of mortgage interest received in a trade or
business, foreclosures and abandonments of any Mortgaged Property and the
information returns relating to cancellation of indebtedness income with respect
to any Mortgaged Property required by Sections 6050H, 6050J and 6050P of the
Code, respectively, and deliver to the Trustee an Officers' Certificate stating
that such reports have been filed. Such reports shall be in form and substance
sufficient to meet the reporting requirements imposed by such Sections 6050H,
6050J and 6050P of the Code.
-85-
SECTION 4.06. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trustee
shall comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount on the Mortgage Loans,
that the Trustee reasonably believes are applicable under the Code. The consent
of Certificateholders shall not be required for such withholding. In the event
the Trustee withholds any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall, together with its monthly report to
such Certificateholders pursuant to Section 4.02 hereof, indicate such amount
withheld.
SECTION 4.07. Distributions on the Uncertificated REMIC I Regular
Interests.
(a) On each Distribution Date the Trustee shall be deemed to distribute
to itself, as the holder of the Uncertificated REMIC I Regular Interests, the
Uncertificated REMIC I Regular Interest Distribution Amounts in the following
order of priority to the extent of the Available Distribution Amount reduced by
distributions made to the Class R-I Certificates pursuant to Section 4.01(a):
(i) Uncertificated REMIC I Accrued Interest on the Uncertificated
REMIC I Regular Interests for such Distribution Date, plus any
Uncertificated REMIC I Accrued Interest thereon remaining unpaid from
any previous Distribution Date; and
(ii) In accordance with the priority set forth in Section
4.07(b), an amount equal to the sum of the amounts in respect of
principal distributable on the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class
A-10, Class A-11, Class M-1, Class M-2, Class M-3, Class B-1, Class
B-2, Class B-3 and Class R-II Certificates under Section 4.01(c), as
allocated thereto.
(b) The amount described in Section 4.07(a)(ii) shall be deemed
distributed to (i) Uncertificated REMIC I Regular Interest X and Uncertificated
REMIC I Regular Interest Y with the amount to be distributed allocated among
such interests in accordance with the priority assigned to the (i) Class A-3,
Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10,
Class M-1, Class M-2, Class M-3, Class B-1, Class B-2, Class B-3 and Class R-II
Certificates and (ii) Class A-1 Certificates, under Section 4.01(b) until the
Uncertificated Principal Balance of each such interest is reduced to zero.
(c) The portion of the Uncertificated REMIC I Regular Interest
Distribution Amounts described in Section 4.07(a)(ii) shall be deemed
distributed by REMIC I to REMIC II in
-86-
accordance with the priority assigned to the REMIC II Certificates relative to
that assigned to the REMIC I Certificates under Section 4.01(c).
(d) In determining from time to time the Uncertificated REMIC I Regular
Interest X Distribution Amount, Uncertificated REMIC I Regular Interest Y
Distribution Amount and Uncertificated REMIC I IO Regular Interest Distribution
Amount, Realized Losses allocated to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class M-1, Class M-2, Class
M-3, Class B-1, Class B-2, Class B-3 and Class R-II Certificates under Section
4.04 shall be deemed allocated to Uncertificated REMIC I Regular Interest X;
Realized Losses allocated to the Class A-1 and Class A-2 Certificates under
Section 4.04 shall be deemed allocated to Uncertificated REMIC I Regular
Interest Y; and Realized Losses allocated to the Class A-11 Certificates
pursuant to Section 4.04 shall be deemed allocated to the Uncertificated REMIC I
IO Regular Interests.
(e) On each Distribution Date the Trustee shall be deemed to distribute
from REMIC II, in the priority set forth in Sections 4.01(a) and (b), to the
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8, Class A-9, Class A-10, Class A-11, Class M-1, Class M-2, Class M-3,
Class B-1, Class B-2, Class B-3 and Class R-II Certificates the amounts
distributable thereon, from the Uncertificated REMIC I Regular Interest
Distribution Amounts deemed to have been received by REMIC II from REMIC I under
this Section 4.07.
(f) Notwithstanding the deemed distributions on the Uncertificated REMIC
I Regular Interests described in this Section 4.07, distributions of funds from
the Certificate Account shall be made only in accordance with Section 4.01.
-87-
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
(a) The Certificates will be substantially in the respective forms
annexed hereto as Exhibits ▇-▇, ▇-▇, ▇-▇ and B-3. The Certificates will be
issuable in registered form only. The Class A Certificates (other than the
Interest Only Certificates) and the Class M Certificates will be issued in
minimum denominations of $25,000 and integral multiples of $1 in excess thereof.
The Class B Certificates of each Class will be offered in registered,
certificated form in minimum denominations of $25,000 and integral multiples of
$1,000 in excess thereof, with one Certificate of each such Class evidencing the
remainder of the aggregate initial Certificate Principal Balance of such Class.
The Variable Strip Certificates, the Scheduled Interest Only Certificates and
the Residual Certificates will each be issuable in minimum denominations of any
Percentage Interest representing 5% and multiples of 0.01% in excess thereof.
Upon original issue, the Certificates shall, upon the written
request of the Depositor executed by an officer of the Depositor, be executed
and delivered by the Trustee, authenticated by the Trustee and delivered to or
upon the order of the Depositor upon receipt by the Trustee of the documents
specified in Section 2.01. The Certificates shall be executed by manual or
facsimile signature on behalf of the Trustee in its capacity as trustee
hereunder by a Responsible Officer. Certificates bearing the manual or facsimile
signatures of individuals who were at the time they signed the proper officers
of the Trustee shall bind the Trustee, notwithstanding that such indivi duals or
any of them have ceased to hold such offices prior to the authentication and
delivery of such Certificates or did not hold such offices at the date of such
Certificates. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
a certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates issued on the Closing Date shall be dated the Closing Date and any
Certificates delivered thereafter shall be dated the date of their
authentication.
(b) The Class A Certificates (other than the Class A-11
Certificates) shall initially be issued as one or more Certificates registered
in the name of the Depository or its nominee and, except as provided below,
registration of such Certificates may not be transferred by the Trustee except
to another Depository that agrees to hold such Certificates for the respective
Certificate Owners with Ownership Interests therein. The Certificate Owners
shall hold their respective Ownership Interests in and to each of such Class A
Certificates (except for such remainders) through the book-entry facilities of
the Depository and, except as provided below,
-88-
shall not be entitled to Definitive Certificates in respect of such Ownership
Interests. All transfers by Certificate Owners of their respective Ownership
Interests in the Book-Entry Certificates shall be made in accordance with the
procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall transfer
the Ownership Interests only in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures.
The Trustee, the Master Servicer and the Depositor may for all
purposes (including the making of payments due on the respective Classes of
Book-Entry Certificates) deal with the Depository as the authorized
representative of the Certificate Owners with respect to the respective Classes
of Book-Entry Certificates for the purposes of exercising the rights of
Certificateholders hereunder. The rights of Certificate Owners with respect to
the respective Classes of Book-Entry Certificates shall be limited to those
established by law and agreements between such Certificate Owners and the
Depository Participants and brokerage firms representing such Certificate
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of any Class of Book-Entry Certificates with respect to any particular
matter shall not be deemed inconsistent if they are made with respect to
different Certificate Owners. The Trustee may establish a reasonable record date
in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.
If (i)(A) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Depositor is unable to locate a
qualified successor or (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the
Depository, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee of the Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration of
transfer, the Trustee shall, at the expense of the Depositor, issue the
Definitive Certificates. Neither the Depositor, the Master Servicer nor the
Trustee shall be liable for any actions taken by the Depository or its nominee,
including, without limitation, any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates the Trustee and the
Master Servicer shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.
SECTION 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall maintain a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certif icates and of transfers and exchanges of
Certificates as herein provided.
-89-
(b) Except as provided in Section 5.02(c), no transfer, sale, pledge
or other disposition of a Subordinate Certificate shall be made unless such
transfer, sale, pledge or other disposition is exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), and any
applicable state securities laws or is made in accordance with said Act and
laws. In the event that a transfer of a Subordinate Certificate is to be made
under this Section 5.02(b), (i) the Trustee shall require an Opinion of Counsel
acceptable to and in form and substance satisfactory to the Trustee that such
transfer shall be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from said Act and laws or is being made
pursuant to said Act and laws, which Opinion of Counsel shall not be an expense
of the Trustee, the Depositor or the Master Servicer, provided that such Opinion
of Counsel will not be required in connection with the initial transfer of any
such Certificate by the Depositor or any affiliate thereof, to a non-affiliate
of the Depositor and (ii) the Trustee shall require the transferee to execute a
representation letter, substantially in the form of Exhibit G-1 hereto, and the
Trustee shall require the transferor to execute a representation letter,
substantially in the form of Exhibit G-2 hereto, each acceptable to and in form
and substance satisfactory to the Trustee certifying to the Depositor and the
Trustee the facts surrounding such transfer, which representation letters shall
not be an expense of the Trustee, the Depositor or the Master Servicer; provided
however that such representation letters will not be required in connection with
any transfer of any such Certificate by the Depositor to an affiliate of the
Depositor and the Trustee shall be entitled to conclusively rely upon a
representation (which, upon the request of the Trustee, shall be a written
representation) from the Depositor of the status of such transferee as an
affiliate of the Depositor. Any such Certificateholder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor
and the Master Servicer against any liability that may result if the transfer is
not so exempt or is not made in accordance with such applicable federal and
state laws.
(c) Notwithstanding the requirements of Section 5.02(b), transfers
of Subordinate Certificates may be made in accordance with this Section 5.02(c)
if the prospective transferee of a Certificate provides the Trustee and the
Depositor with an investment letter substantially in the form of Exhibit G-3
attached hereto, which investment letter shall not be an expense of the Trustee,
the Depositor or the Master Servicer, and which investment letter states that,
among other things, such transferee is a "qualified institutional buyer" as
defined under Rule 144A. Such transfers shall be deemed to have complied with
the requirements of Section 5.02(b) hereof; provided, however, that no Transfer
of any of the Subordinate Certificates may be made pursuant to this Section
5.02(c) by the Depositor. Any such Certificateholder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor
and the Master Servicer against any liability that may result if the transfer is
not so exempt or is not made in accordance with such applicable federal and
state laws.
(d) The Trustee shall require an Opinion of Counsel from a
prospective transferee prior to the transfer of any Class B Certificate to any
employee benefit plan or other
-90-
retirement arrangement, including individual retirement accounts and ▇▇▇▇▇
plans, that is subject to Section 406 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or Section 4975 of the Code (any of the
foregoing, a "Plan"), to a trustee or other Person acting on behalf of any Plan,
or to any other person who is using "plan assets" of any Plan to effect such
acquisition (including any insurance company using funds in its general or
separate accounts that may constitute "plan assets"). Such Opinion of Counsel
must establish to the satisfaction of the Trustee that such disposition will not
violate the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code. Neither the Depositor, the Master Servicer nor the
Trustee will be required to obtain such Opinion of Counsel on behalf of any
prospective transferee. In lieu of such Opinion of Counsel, the Trustee shall
require a certification in the form of Exhibit G-6 (or in a form substantially
similar to such Exhibit G-6 as shall be agreed upon by the Trustee), in the case
of the transfer of any of the foregoing Certificates to a person capable of
providing such certification, substantially to the effect that all funds used by
such transferee to purchase such Certificates will be funds held by it in its
general account which it reasonably believes do not constitute "plan assets" of
any Plan (as defined above); provided however that such certification will not
be required in connection with any transfer of any such Certificate by the
Depositor to an affiliate of the Depositor and the Trustee shall be entitled to
conclusively rely upon a representation (which, upon the request of the Trustee,
shall be a written representation) from the Depositor of the status of such
transferee as an affiliate of the Depositor. The permission of any transfer in
violation of the restriction on transfer set forth in this paragraph shall not
constitute a default or an Event of Default.
Any person purchasing a Class M or Residual Certificate shall be
deemed to have represented that either: (i) such person is not a Plan subject to
ERISA or the Code (or comparable provisions of any subsequent enactments) and is
not acting, directly or indirectly, on behalf of any such Plan or acquiring such
Certificate with Plan Assets; or (ii) the purchase of such Certificate is
permissible under applicable law, will not constitute or result in any
non-exempt prohibited transaction under ERISA or Section 4975 of the Code, will
not subject the Depositor, the Trustee or the Master Servicer to any obligation
or liability (including obligations or liabilities under ERISA or Section 4975
of the Code) in addition to those undertaken in this Agreement and the exemptive
relief granted by the DOL pursuant to Prohibited Transaction Class Exemption
95-60 is available with respect to the purchase, sale and holding of such
Certificate.
(e) (i) Each Person who has or who acquires any Ownership Interest
in a Residual Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following provisions
and to have irrevocably authorized the Trustee or its designee under clause
(iii)(A) below to deliver payments to a Person other than such Person and to
negotiate the terms of any mandatory sale under clause (iii)(B) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale. The rights of each Person acquiring any Ownership
Interest in a Residual Certificate are expressly subject to the following
provisions:
-91-
(A) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(B) In connection with any proposed Transfer of any Ownership Interest
in a Residual Certificate, the Trustee shall require delivery to it, and
shall not register the Transfer of any Residual Certificate until its
receipt of (I) an affidavit and agreement (a "Transfer Affidavit and
Agreement" in the form attached hereto as Exhibit G-5) from the proposed
Transferee, in form and substance satisfactory to the Trustee representing
and warranting, among other things, that it is a Permitted Transferee, that
it is not acquiring its Ownership Interest in the Residual Certificate that
is the subject of the proposed Transfer as a nominee, trustee or agent for
any Person who is not a Permitted Transferee, that for so long as it
retains its Ownership Interest in a Residual Certificate, it will endeavor
to remain a Permitted Transferee, and that it has reviewed the provisions
of this Section 5.02 and agrees to be bound by them, and (II) a
certificate, in the form attached hereto as Exhibit G-4, from the Holder
wishing to transfer the Residual Certificate, in form and substance
satisfactory to the Trustee representing and warranting, among other
things, that no purpose of the proposed Transfer is to impede the
assessment or collection of tax.
(C) Notwithstanding the delivery of a Transfer Affidavit and Agreement
by a proposed Transferee under clause (B) above, if a Responsible Officer
of the Trustee assigned to this transaction has actual knowledge that the
proposed Transferee is not a Permitted Transferee, no Transfer of an
Ownership Interest in a Residual Certificate to such proposed Transferee
shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall agree (x) to require a Transfer Affidavit and
Agreement from any other Person to whom such Person attempts to transfer
its Ownership Interest in a Residual Certificate and (y) not to transfer
its Ownership Interest unless it provides a certificate to the Trustee in
the form attached hereto as Exhibit G-4.
(E) Each Person holding or acquiring an Ownership Interest in a
Residual Certificate, by purchasing an Ownership Interest in such
Certificate, agrees to give the Trustee written notice that it is a
"pass-through interest holder" within the meaning of Temporary Treasury
Regulations Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an
Ownership Interest in a Residual Certificate, if it is "a pass-through
interest holder", or is holding an Ownership Interest in a Residual
Certificate on behalf of a "pass-through interest holder."
-92-
(ii) The Trustee will register the Transfer of any Residual
Certificate only if it shall have received the Transfer Affidavit and Agreement
in the form attached hereto as Exhibit G-5, a certificate of the Holder
requesting such transfer in the form attached hereto as Exhibit G-4 and all of
such other documents as shall have been reasonably required by the Trustee as a
condition to such registration. Transfers of the Residual Certificates to
Non-United States Persons and Disqualified Organizations are prohibited.
(iii) (A) If any Disqualified Organization shall become a Holder of
a Residual Certificate, then the last preceding Permitted Transferee shall be
restored, to the extent permitted by law, to all rights and obligations as
Holder thereof retroactive to the date of registration of such Transfer of such
Residual Certificate. If a Non-United States Person shall become a Holder of a
Residual Certificate, then the last preceding Permitted Transferee shall be
restored, to the extent permitted by law, to all rights and obligations as
Holder thereof retroactive to the date of registration of such Transfer of such
Residual Certificate. If a transfer of a Residual Certificate is disregarded
pursuant to the provisions of Treasury Regulations Section 1.860E-1 or Section
1.860G-3, then the last preceding Permitted Transferee shall be restored, to the
extent permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such Transfer of such Residual
Certificate. The Trustee shall be under no liability to any Person for any
registration of Transfer of a Residual Certificate that is in fact not permitted
by this Section 5.02 or for making any payments due on such Certificate to the
holder thereof or for taking any other action with respect to such holder under
the provisions of this Agreement.
(B) If any purported Transferee shall become a Holder of a
Residual Certificate in violation of the restrictions in this Section 5.02 and
to the extent that the retroactive restoration of the rights of the Holder of
such Residual Certificate as described in clause (iii)(A) above shall be
invalid, illegal or unenforceable, then the Trustee shall have the right,
without notice to the holder or any prior holder of such Residual Certificate,
to sell such Residual Certificate to a purchaser selected by the Trustee on such
terms as the Trustee may choose. Such purported Transferee shall promptly
endorse and deliver each Residual Certificate in accordance with the
instructions of the Trustee. Such purchaser may be the Trustee itself. The
proceeds of such sale, net of the commissions (which may include commissions
payable to the Trustee), expenses and taxes due, if any, will be remitted by the
Trustee to such purported Transferee. The terms and conditions of any sale under
this clause (iii)(B) shall be determined in the sole discretion of the Trustee,
and the Trustee shall not be liable to any Person having an Ownership Interest
in a Residual Certificate as a result of its exercise of such discretion.
(iv) The Trustee shall make available to the Internal Revenue
Service and those Persons specified by the REMIC Provisions, all information
necessary to compute any tax imposed (A) as a result of the transfer of an
ownership interest in a Residual Certificate to any Person who is a Disqualified
Organization, including the information regarding "excess inclusions" of such
Residual Certificates required to be provided to the Internal Revenue Service
and certain Persons
-93-
as described in Treasury Regulations Sections 1.860D-1(b)(5) and 1.860E-2(a)(5),
and (B) as a result of any regulated investment company, real estate investment
trust, common trust fund, partnership, trust, estate or organization described
in Section 1381 of the Code that holds an Ownership Interest in a Residual
Certificate having as among its record holders at any time any Person who is a
Disqualified Organization. The Trustee may charge and shall be entitled to
reasonable compensation for providing such information as may be required from
those Persons which may have had a tax imposed upon them as specified in clauses
(A) and (B) of this paragraph for providing such information.
(f) Subject to the preceding paragraphs, upon surrender for
registration of transfer of any Certificate at the office of the Trustee
maintained for such purpose, the Trustee shall execute and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same Class of a like aggregate
Percentage Interest. Every Certificate surrendered for transfer shall be
accompanied by notifica tion of the account of the designated transferee or
transferees for the purpose of receiving distri butions pursuant to Section 4.01
by wire transfer, if any such transferee desires and is eligible for
distribution by wire transfer.
(g) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of the same Class
of a like aggregate Percentage Interest, upon surrender of the Certificates to
be exchanged at the office of the Trustee. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute, authenticate and deliver the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate 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 satisfac tory to the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing.
(h) No service charge shall be made to the Certificateholders for
any transfer or exchange of Certificates, but the Trustee may require payment of
a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(i) All Certificates surrendered for transfer and exchange shall be
cancelled and retained by the Trustee in accordance with the Trustee's standard
procedures.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (ii) there is delivered to the Trustee such
security or indemnity as may be required by it to save it harmless, then, in the
absence of notice to the Trustee that such Certificate has been acquired by a
bona fide
-94-
purchaser, the Trustee shall execute, authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of the same Class and Percentage Interest. Upon the issuance of any
new Certificate under this Section, the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith. Any replacement Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership in
the Trust Fund, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
SECTION 5.04. Persons Deemed Owners.
The Depositor, the Master Servicer, the Trustee and any agent of any
of them may treat the person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions pursuant to
Section 4.01 and for all other purposes whatsoever, and neither the Depositor,
the Master Servicer, the Trustee nor any agent of any of them shall be affected
by notice to the contrary.
-95-
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
SECTION 6.01. Liability of the Depositor and the Master Servicer.
The Depositor and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Depositor and the Master Servicer herein. Only the
Master Servicer, any successor Master Servicer or the Trustee acting as Master
Servicer shall be liable with respect to the servicing of the Mortgage Loans and
the REO Property for actions taken by any such Person in contravention of the
Master Servicer's duties hereunder.
SECTION 6.02. Merger, Consolidation or Conversion of the Depositor
or the Master Servicer.
The Depositor and the Master Servicer each will keep in full effect
its existence, rights and franchises as a corporation under the laws of the
state of its incorporation, and each will obtain and preserve its qualification
to do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
Any Person into which the Depositor or the Master Servicer may be
merged, consolidated or converted, or any corporation resulting from any merger
or consolidation to which the Depositor or the Master Servicer shall be a party,
or any Person succeeding to the business of the Depositor or the Master
Servicer, shall be the successor of the Depositor or the Master Servicer, as the
case may be, hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor or surviving
Person to the Master Servicer shall be qualified to sell mortgage loans to and
service mortgage loans for FNMA or FHLMC.
SECTION 6.03. Limitation on Liability of the Depositor, the Master
Servicer and Others.
Neither the Depositor, the Master Servicer nor any of the directors,
officers, employees or agents of the Depositor or the Master Servicer shall be
under any liability to the Trust Fund or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor or the Master Servicer (but this
provision shall protect the above described persons) against any breach of
warranties or representations made
-96-
herein, or against any specific liability imposed on the Master Servicer
pursuant to Section 3.01 or any other Section hereof; and provided further that
this provision shall not protect the Depositor, the Master Servicer or any such
person, against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of reckless disregard of obligations and duties hereunder. The
Depositor, the Master Servicer and any director, officer, employee or agent of
the Depositor or the Master Servicer may rely in good faith on any document of
any kind PRIMA FACIE properly executed and submitted by any Person respecting
any matters arising hereunder. The Depositor, the Master Servicer and any
director, officer, employee or agent of the Depositor or the Master Servicer
shall be indemnified and held harmless by the Trust Fund against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates (including reasonable legal fees and
disbursements of counsel), other than (a) any loss, liability or expense related
to Master Servicer's servicing obligations with respect to any specific Mortgage
Loan or Mortgage Loans (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) or related to the Master
Servicer's obligations under Section 3.01, or (b) any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor the Master Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its respective duties under this Agreement and which
in its opinion may involve it in any expense or liability; provided, however,
that the Depositor or the Master Servicer may in its sole discretion undertake
any such action which it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom (except any action or
liability related to the Master Servicer's obligations under Section 3.01) shall
be expenses, costs and liabilities of the Trust Fund, and the Depositor and the
Master Servicer shall be entitled to be reimbursed therefor from the Certificate
Account as provided in Section 3.11, any such right of reimbursement being prior
to the rights of Certificateholders to receive any amount in the Certificate
Account.
SECTION 6.04. Limitation on 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 servicer
reasonably acceptable to the Trustee upon receipt by the Trustee of a letter
from the Rating Agency that such a resignation and appointment will not, in and
of itself, result in a downgrading of the Certificates 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 (at the expense of the resigning Master
Servicer) to such effect delivered to the Trustee. No such resignation shall
become effective until the Trustee or a successor servicer shall have assumed
the Master Servicer's responsibilities, duties, liabilities and obligations
hereunder.
-97-
SECTION 6.05. Sale and Assignment of Master Servicing.
The Master Servicer may sell and assign its rights and delegate its
duties and obligations in their entirety as Master Servicer under this
Agreement; PROVIDED, HOWEVER, that: (i) the purchaser or transferee accepting
such assignment and delegation (a) shall be a Person which shall be qualified to
service mortgage loans for FNMA or FHLMC; (b) shall, in the case of successor
master servicers only, have a net worth of not less than $10,000,000 (unless
otherwise approved by each Rating Agency pursuant to clause (ii) below); (c)
shall be reasonably satisfactory to the Trustee (as evidenced in a writing
signed by the Trustee) as having a comparable servicing ability to that of the
Master Servicer on the Closing Date; (d) shall execute and deliver to the
Trustee an agreement, in form and substance reasonably satisfactory to the
Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it as master servicer under this Agreement and any custodial
agreement, from and after the effective date of such agreement; (ii) each Rating
Agency shall be given prior written notice of the identity of the proposed
successor to the Master Servicer and each Rating Agency's rating of the
Certificates in effect immediately prior to such assignment, sale and delegation
will not be downgraded or withdrawn as a result of such assignment, sale and
delegation, as evidenced by a letter to such effect delivered to the Master
Servicer and the Trustee; and (iii) the Master Servicer assigning and selling
the master servicing shall deliver to the Trustee an Officer's Certificate and
an Opinion of Counsel, each stating that all conditions precedent to such action
under this Agreement have been completed and such action is permitted by and
complies with the terms of this Agreement. No such assignment or delegation
shall affect any liability of the Master Servicer arising prior to the effective
date thereof.
-98-
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events:
(i) any failure by the Master Servicer to remit to the Trustee for
distribution to the Certificateholders any payment (other than an Advance)
required to be made under the terms of the Certificates or this Agreement
which continues unremedied for two (2) Business Days after such amount was
required to be remitted; or
(ii) any failure on the part of the Master Servicer duly to observe or
perform in any material respect any other of the covenants or agreements on
the part of the Master Servicer contained in the Certificates or in this
Agreement (including any breach of the Master Servicer's representations
and warranties pursuant to Section 2.03(a) which materially and adversely
affects the interests of the Certificateholders) which continues unremedied
for a period of 60 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 Certificates entitled to at least 25% of the Voting
Rights; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or the appointment
of a conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceedings, or
for the winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 consecutive days; or
(iv) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or of or relating to all or substantially
all of its property; or
(v) 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 or otherwise voluntarily commence a case or proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar statute,
make an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations; or
-99-
(vi) the Master Servicer shall fail to deposit in the Certificate
Account on any Certificate Account Deposit Date an amount equal to any
required Advance which continues unremedied for the earlier of (a) a period
of two (2) Business Days or (b) the Business Day immediately preceding the
Distribution Date.
If an Event of Default described in clauses (i) - (v) 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 or the Holders of Certificates
entitled to at least 51% of the Voting Rights, by notice in writing to the
Master Servicer (and to the Trustee if given by such Holders of Certificates),
with a copy to the Rating Agencies, may terminate all of the rights and
obligations (but not the liabilities) of the Master Servicer under this
Agreement and in and to the Trust Fund, other than its rights as a
Certificateholder hereunder; provided, however, that the successor to the Master
Servicer appointed pursuant to Section 7.02 shall have accepted the duties of
Master Servicer effective upon the resignation or termination of the Master
Servicer. If an Event of Default described in clause (vi) hereof shall occur,
the Trustee shall, by notice to the Master Servicer, and the Depositor,
terminate all of the rights and obligations of the Master Servicer under this
Agreement and in and to the Trust Fund, other than its rights as a
Certificateholder hereunder; provided, however, that if the Trustee determines
(in its sole discretion) that the failure by the Master Servicer to make any
required Advance was due to circumstances beyond its control, and the required
Advance was otherwise made, the Trustee shall not terminate the Master Servicer.
On or after the receipt by the Master Servicer of such notice, all authority and
power of the Master Servicer under this Agreement, whether with respect to the
Certificates (other than as a holder thereof) or the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee pursuant to and under this
Section, and, without limitation, the Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the Master Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Mortgage Loans and related documents, or otherwise at the
expense of the Master Servicer. The Master Servicer agrees to cooperate (and pay
any related costs and expenses) with the Trustee in effecting the termination of
the Master Servicer's respon sibilities and rights hereunder, including, without
limitation, the transfer to the Trustee or its appointed agent for
administration by it of (i) the property and amounts which are then or should be
part of the Trust Fund or which thereafter become part of the Trust Fund; (ii)
originals or copies of all documents of the Master Servicer reasonably requested
by the Trustee to enable it to assume the Master Servicer's duties thereunder;
(iii) the rights and obligations of the Master Servicer under the Sub- Servicing
Agreements with respect to the Mortgage Loans; and (iv) all cash amounts which
shall at the time be deposited by the Master Servicer or should have been
deposited to the Custodial or the Certificate Account or thereafter be received
with respect to the Mortgage Loans. The Trustee shall not be deemed to have
breached any obligation hereunder as a result of a failure to make or delay in
making any distribution as and when required hereunder caused by the failure of
the Master Servicer to remit any amounts received on it or to deliver any
-100-
documents held by it with respect to the Mortgage Loans. For purposes of this
Section 7.01, the Trustee shall not be deemed to have knowledge of an Event of
Default unless a Responsible Officer of the Trustee assigned to and working in
the Trustee's corporate trust division has actual knowledge thereof or unless
notice of any event which is in fact such an Event of Default is received by the
Trustee and such notice references the Certificates, the Trust Fund or this
Agreement.
SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01 (i)-(v), the Trustee or its appointed agent
shall be the successor in all respects to the Master Servicer in its capacity as
Master Servicer under this Agreement and the transactions set forth or provided
for herein and shall be subject thereafter to all the responsibilities, duties
and liabilities relating thereto placed on the Master Servicer including the
obligation to make Advances which have been or will be required to be made
(except for the responsibilities, duties and liabilities contained in Section
2.03 and its obligations to deposit amounts in respect of losses pursuant to
Section 3.12 and 4.01(i)) by the terms and provisions hereof; and provided
further, that any failure to perform such duties or responsibilities caused by
the Master Servicer's failure to provide information required by Section 4.03
shall not be considered a default by the Trustee hereunder. As compensation
therefor, the Trustee shall be entitled to all funds relating to the Mortgage
Loans which the Master Servicer would have been entitled to charge to the
Custodial Account and the Certificate Account if the Master Servicer had
continued to act hereunder. If the Trustee has become the successor to the
Master Servicer in accordance with Section 6.04 or Section 7.02, then
notwithstanding the above, if the Trustee shall be unwilling to so act, or shall
be unable to so act, the Trustee may appoint, or petition a court of competent
jurisdiction or appoint, any established housing and home finance institution,
which is also a FNMA- or FHLMC-approved mortgage servicing institution, having a
net worth of not less than $10,000,000 as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder. Pending appointment of a
successor to the Master Servicer hereunder, the Trustee shall act in such
capacity as herein above provided. In connection with such appointment and
assumption, the Trustee may make such arrangements for the compensation of such
successor out of payments on Mortgage Loans as it and such successor shall
agree; provided, however, that no such compensation shall be in excess of that
permitted the Master Servicer hereunder. Each of the Seller, the Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession.
Any successor, including the Trustee, to the Master Servicer shall
maintain in force during its term as master servicer hereunder policies and
fidelity bonds to the same extent as the Master Servicer is so required pursuant
to Section 3.18.
-101-
SECTION 7.03. Notification to Certificateholders.
(a) Upon any such termination or appointment of a successor to the
Master Servicer, the Trustee shall give prompt notice thereof to
Certificateholders and to the Rating Agencies.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
SECTION 7.04. Waiver of Events of Default.
The Holders representing at least 51% of the Voting Rights of
Certificates affected by a default or Event of Default hereunder, may waive such
default or Event of Default (other than an Event of Default set forth in Section
7.01 (vi)); PROVIDED, HOWEVER, that (a) a default or Event of Default under
clause (i) of Section 7.01 may be waived only by all of the Holders of
Certificates affected by such default or Event of Default and (b) no waiver
pursuant to this Section 7.04 shall affect the Holders of Certificates in the
manner set forth in the second paragraph of Section 11.01 or materially
adversely affect any non-consenting Certificateholder. Upon any such waiver of a
default or Event of Default by the Holders representing the requisite percentage
of Voting Rights of Certificates affected by such default or Event of Default,
such default or Event of Default shall cease to exist and shall be deemed to
have been remedied for every purpose hereunder. No such waiver shall extend to
any subsequent or other default or Event of Default or impair any right
consequent thereon except to the extent expressly so waived. The Master Servicer
shall give notice of any such waiver to the Rating Agencies.
SECTION 7.05. List of Certificateholders.
Upon written request of three or more Certificateholders of record,
for purposes of communicating with other Certificateholders with respect to
their rights under this Agreement, the Trustee will afford such
Certificateholders access during business hours to the most recent list of
Certificateholders held by the Trustee.
-101-
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 or waiver of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If an Event of Default occurs, is continuing and has
not been waived, the Trustee shall exercise such of the rights and powers vested
in it by this Agreement, and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them in accordance with the
requirements of this Agreement. If any such instrument is found not to conform
to the requirements of this Agreement in a material manner, the Trustee shall
take such 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 Certificateholders. Notwithstanding the
foregoing, the Trustee shall not be responsible for the accuracy or content of
any resolution, certificate, statement, opinion, report, document, order or
other instrument furnished by the Master Servicer hereunder or any Opinion of
Counsel required hereunder.
The Trustee shall prepare and file or cause to be filed on behalf of
the Trust Fund any tax return that is required with respect to both REMIC I and
REMIC II pursuant to applicable federal, state or local tax laws.
The Trustee covenants and agrees that it shall perform its
obligations hereunder in a manner so as to maintain the status of both REMIC I
and REMIC II under the REMIC Provisions and to prevent the imposition of any
federal, state or local income, prohibited transaction, contribution or other
tax on either REMIC I or REMIC II to the extent that maintaining such status and
avoiding such taxes are reasonably within the control of the Trustee and are
reasonably within the scope of its duties under this Agreement.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
-103-
(i) Prior to the occurrence of an Event of Default, and after the
curing or waiver of all such Events of Default which may have
occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement
against the Trustee and, in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Trustee and conforming
to the requirements of this Agreement;
(ii) The Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and
(iii) The Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Certificates 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 this Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(a) The Trustee may rely upon and shall be protected in acting or
refraining from acting in reliance upon any resolution, Officers'
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document reasonably believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(b) The Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in
accordance therewith;
(c) The Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement, other than its obligation
to give notice pursuant to this Agreement, or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request, order
or direction of any of the Certificateholders, pursuant to the
-104-
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby; nothing
contained herein shall, however, relieve the Trustee of the obligation,
upon the occurrence of an Event of Default of which a Responsible Office of
the Trustee's corporate trust department has actual knowledge (which has
not been waived or cured), to exercise such of the rights and powers vested
in it by this Agreement, and to use the same degree of care and skill in
their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(d) The Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Agreement;
(e) Prior to the occurrence of an Event of Default hereunder and after
the curing or waiver of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or document, unless requested in writing to do so by the Holders of
Certificates entitled to at least 25% of the Voting Rights; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, reasonably assured to
the Trustee by the security afforded to it by the terms of this Agreement
reasonable expense of every such examination shall be paid by the
Certificateholders requesting the investigation;
(f) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys; and
(g) The Trustee shall not be required to give any bond or surety with
respect to the execution of the trust created hereby or the powers granted
hereunder.
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than
the signature of the Trustee, the authentication of the Trustee on the
Certificates, the acknowledgments of the Trustee contained in Article II and the
representations and warranties of the Trustee in Section 8.12) shall be taken as
the statements of the Depositor and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations or warranties as to the
validity or sufficiency of this Agreement (other than as specifically set forth
in Section 8.12) or of the Certificates (other than the signature and
authentication of the Trustee on the Certificates) or of any Mortgage Loan
-105-
or related document. The Trustee shall not be accountable for the use or
application by the Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Depositor or the Master Servicer in respect of the Mortgage Loans or deposited
in or withdrawn from the Custodial Account by the Master Servicer.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity (other than as
Trustee hereunder) may become the owner or pledgee of Certificates with the same
rights it would have if it were not Trustee and may otherwise deal with the
parties hereto.
SECTION 8.05. Trustee's Fees.
On each Distribution Date, the Trustee shall be entitled to withdraw
from the Certificate Account as compensation hereunder the Trustee Fees. Such
compensation (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) shall be paid for all
services rendered by it (except as otherwise reimbursed by the Master Servicer
pursuant to a separate fee letter between the Master Servicer and the Trustee)
in the execution of the trusts hereby created and in the exercise and
performance of any of the powers and duties hereunder or of the Trustee. Except
as otherwise provided in this Agreement, the Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified and held harmless by the
Trust Fund against any claim, loss, liability, fee or expense incurred in
connection with any Event of Default, any breach of this Agreement or any claim
or legal action (including any pending or threatened claim or legal action)
relating to the acceptance or administration of its trusts hereunder or the
Certificates, other than any claim, loss, liability or expense (i) sustained in
connection with this Agreement related to the willful misfeasance, bad faith or
negligence of the Master Servicer in the performance of its duties hereunder or
(ii) incurred in connection with a breach constituting willful misfeasance, bad
faith or negligence of the Trustee in the performance of its duties hereunder or
by reason of reckless disregard of its obligations and duties hereunder.
The Master Servicer shall indemnify the Trustee and any director,
officer, employee or agent of the Trustee against any such claim or legal action
(including any pending or threatened claim or legal action), loss, liability,
fee or expense that may be sustained in connection with this Agreement related
to the willful misfeasance, bad faith, or negligence in the performance of the
Master Servicer's duties hereunder.
The provisions of this Section 8.05 shall survive the resignation or
removal of the Trustee or the termination of this Agreement.
SECTION 8.06. Eligibility Requirements for Trustee.
-106-
The Trustee hereunder shall at all times be a corporation or a
national banking association organized and doing business under the laws of any
state or the United States of America or the District of Columbia, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authority. In addition, the Trustee shall at all times be
acceptable to the Rating Agency rating the Certificates. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. 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. The corporation or national banking association serving as Trustee
may have normal banking and trust relationships with the Seller and their affili
ates or the Master Servicer and its affiliates; provided, however, that such
corporation cannot be an affiliate of the Master Servicer other than the Trustee
in its role as successor to the Master Servicer.
SECTION 8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Master Servicer; with a
copy to the Rating Agencies; provided, that such resignation shall not be
effective until a successor trustee is appointed and accepts appointment in
accordance with the following provisions. Upon receiving such notice of
resignation, the Master Servicer shall promptly appoint a successor trustee who
meets the eligibility requirements of Section 8.06 by written instrument, in
triplicate, one copy of which instrument shall be delivered to each of the
resigning Trustee and to the successor trustee. 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;
provided, however, that the resigning Trustee shall not resign and be discharged
from the trusts hereby created until such time as the Rating Agency rating the
Certificates approves the successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Master Servicer, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, the
Master Servicer may remove the Trustee and appoint a successor trustee who meets
the eligibility requirements of Section 8.06 by written instrument, in
triplicate, which instrument shall be delivered to the Trustee so removed and to
the successor trustee.
-107-
The Holders of Certificates 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 Master Servicer, one complete set to the Trustee so
removed and one complete set to the successor so appointed. A copy of such
instrument shall be delivered to the Certificateholders and the Depositor by the
Master Servicer.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08.
SECTION 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Master Servicer and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the prede cessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall after payment of its outstanding fees and
expenses, promptly deliver to the successor trustee all assets and records of
the Trust Fund held by it hereunder, and the Master Servicer and the predecessor
trustee shall execute and deliver all 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.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Master Servicer shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates at their addresses as shown in
the Certificate Register. If the Master Servicer fails to mail such notice
within ten days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Master Servicer.
SECTION 8.09. Merger or Consolidation of Trustee.
Any state bank or trust company or national banking association into
which the Trustee may be merged or converted or with which it may be
consolidated or any state bank or trust company or national banking association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any state bank or trust company or national
-108-
banking association succeeding to all or substantially all of the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided such state bank or trust company or national banking association 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.
Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located, the
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 separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Per sons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
8.10, such powers, duties, obligations, rights and trusts as the Master Servicer
and the Trustee may consider necessary or desirable. If the Master Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, or in case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment
without the Master Servicer. No co-trustee or separate trustee hereunder shall
be required to meet the terms of eligibility as a successor trustee under
Section 8.06 hereunder and no notice to Holders of Certificates of the
appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 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 and required to be conferred or such
co-trustee shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Fund or any portion thereof in any
such jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article 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
-109-
therein, subject to all the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
-110-
ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All
Mortgage Loans or upon Purchase of Certificates.
(a) Subject to Section 9.03, the respective obligations and
responsibilities of the Depositor, the Master Servicer and the Trustee created
hereby (other than the obligations of the Master Servicer to the Trustee
pursuant to Section 8.05 and of the Master Servicer to provide for and the
Trustee to make payments to Certificateholders as hereafter set forth) shall
terminate upon payment to the Certificateholders of all amounts held by or on
behalf of the Trustee and required to be paid to them hereunder following the
earlier to occur of (i) the repurchase by the Master Servicer or its designee of
all Mortgage Loans and each REO Property in respect thereof remaining in the
Trust Fund at a price equal to (a) 100% of the unpaid principal balance of each
Mortgage Loan (other than one as to which a REO Property was acquired) on the
day of repurchase together with accrued interest on such unpaid principal
balance at the Net Mortgage Rate to the first day of the month in which the
proceeds of such repurchase are to be distributed, plus (b) the appraised value
of any REO Property (but not more than the unpaid principal balance of the
related Mortgage Loan, together with accrued interest on that balance at the Net
Mortgage Rate to the first day of the month such repurchase price is
distributed), less the good faith estimate of the Master Servicer of liquidation
expenses to be incurred in connection with its disposal thereof, such appraisal
to be conducted by an appraiser mutually agreed upon by the Master Servicer and
the Trustee at the expense of the Master Servicer, and (ii) the final payment or
other liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund (or the disposition of all REO Property in
respect thereof); provided, however, that in no event shall the trust created
hereby continue beyond the expiration of 21 years from the death of the last
survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the
United States to the Court of St. ▇▇▇▇▇, living on the date hereof, and provided
further that the purchase price set forth above shall be increased as is
necessary, as determined by the Master Servicer, to avoid disqualification of
either REMIC I or REMIC II as a REMIC. In the case of any repurchase by the
Master Servicer pursuant to clause (i), the Master Servicer shall include in
such repurchase price the amount of any Advances that will be reimbursed to the
Master Servicer pursuant to Section 3.11(iii) and the Master Servicer shall
exercise reasonable efforts to cooperate fully with the Trustee in effecting
such repurchase and the transfer of the Mortgage Loans and related Mortgage
Files and related records to the Master Servicer.
The right of the Master Servicer or its designee to repurchase all
Mortgage Loans pursuant to (i) above shall be conditioned upon the aggregate
Stated Principal Balance of such Mortgage Loans at the time of any such
repurchase aggregating an amount equal to or less than 10% of the aggregate
Stated Principal Balance of the Mortgage Loans at the Cut-off Date. If such
-111-
right is exercised, the Master Servicer upon such repurchase shall provide to
the Trustee, notice of such exercise prior to the Determination Date in the
month preceding the month of purchase and the certification required by Section
3.16.
Notice of any termination, specifying the Distribution Date upon
which the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distri bution and cancellation, shall be given promptly by
the Trustee by letter to the Certificateholders mailed (a) in the event such
notice is given in connection with the Master Servicer's election to repurchase,
not earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution or (b) otherwise during the month
of such final distribution on or before the Determination Date in such month, in
each case specifying (i) the Distribution Date upon which final payment of the
Certificates will be made upon presentation and surrender of Certificates at the
office of the Trustee therein designated, (ii) the amount of any such final
payment and (iii) that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office of the Trustee therein specified. In the event
such notice is given in connection with the Master Servicer or its designee's
election to repurchase, the Master Servicer or its designee shall deliver to the
Trustee for deposit in the Certificate Account on the Business Day immediately
preceding the Distribution Date specified in such notice an amount equal to the
above-described repurchase price payable out of its own funds. Upon presentation
and surrender of the Certificates by the Certificateholders, the Trustee shall
distribute to the Certificateholders (i) the amount otherwise distributable on
such Distribution Date, if not in connection with the Master Servicer's election
to repurchase, or (ii) if the Master Servicer elected to so repurchase, an
amount deter mined as follows: with respect to each Class A Certificate and
Subordinate Certificate, the outstanding Certificate Principal Balance thereof,
plus one month's interest thereon at the appli cable Pass-Through Rate and any
previously unpaid Accrued Certificate Interest; and with respect to the Residual
Certificates, the Percentage Interest evidenced thereby multiplied by the
difference, if any, between the above described repurchase price and the
aggregate amount to be distributed to the Holders of the Class A Certificates
and Subordinate Certificates, subject to the priorities set forth in Section
4.01(c). Upon certification to the Trustee by a Servicing Officer, following
such final deposit, the Trustee shall promptly release the Mortgage Files as
directed by the Master Servicer for the remaining Mortgage Loans, and the
Trustee shall execute all assignments, endorsements and other instruments
required by the Master Servicer as being necessary to effectu ate such transfer.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the time specified
in the above-mentioned notice, the Trustee shall give a second notice to the
remaining Certificateholders to surrender their Certificates for cancellation
and receive the final distribution with respect thereto. If within six months
after the second notice all of the Certificates shall not have been surrendered
for cancellation, the Trustee shall take reasonable steps as directed by the
Depositor, or appoint an
-112-
agent to take reasonable steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other assets which remain subject hereto. If within nine
months after the second notice all the Certificates shall not have been
surrendered for cancellation, the Residual Certificateholders shall be entitled
to all unclaimed funds and other assets which remain subject hereto.
(b) On any Distribution Date on which the Stated Principal Balance of
the Mortgage Loans is less than ten percent of the Cut-off Date Stated Principal
Balance of the Mortgage Loans, either the Master Servicer or the Depositor,
whichever gives notice first, shall have the right, at its option, to purchase
the Certificates in whole, but not in part, at a price equal to the outstanding
Certificate Principal Balance of such Certificates plus the sum of one month's
Accrued Certificate Interest thereon and any previously unpaid Accrued
Certificate Interest.
The Master Servicer or the Depositor, as applicable, shall give the
Trustee not less than 60 days' prior notice of the Distribution Date on which
the Master Servicer or the Depositor, as applicable, anticipates that it will
purchase the Certificates pursuant to Section 9.01(b). Notice of any such
purchase, specifying the Distribution Date upon which the Holders may surrender
their Certificates to the Trustee for payment in accordance with this Section
9.01(b), shall be given promptly by the Master Servicer or the Company, as
applicable, by letter to Certificateholders (with a copy to the Trustee and each
Rating Agency) mailed not earlier than the 15th day and not later than the 25th
day of the month next preceding the month of such final distribution,
specifying:
(i) the Distribution Date upon which purchase of the Certificates is
anticipated to be made upon presentation and surrender of such Certificates
at the office or agency of the Trustee therein designated,
(ii) the purchase price therefor, if known, and
(iii) that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and
surrender of the Certificates at the office or agency of the Trustee
therein specified.
If either the Master Servicer or the Depositor gives the notice specified above,
the Master Servicer or the Depositor, as applicable, shall deposit in the
Certificate Account before the Distribution Date on which the purchase pursuant
to Section 9.01(b) is to be made, in immediately available funds, an amount
equal to the purchase price for the Certificates computed as provided above.
Upon presentation and surrender of the Certificates to be purchased
pursuant to Section 9.01(b) by the Holders thereof, the Trustee shall distribute
to such Holders an amount equal to the
-113-
outstanding Certificate Principal Balance thereof plus the sum of one month's
Accrued Certificate Interest thereon and any previously unpaid Accrued
Certificate Interest with respect thereto.
In the event that any Certificateholders do not surrender their
Certificates on or before the Distribution Date on which a purchase pursuant to
this Section 9.01(b) is to be made, the Trustee shall on such date cause all
funds in the Certificate Account deposited therein by the Master Servicer or the
Depositor, as applicable, pursuant to this Section 9.01(b) to be withdrawn
therefrom and deposited in a separate escrow account for the benefit of such
Certificateholders, and the Master Servicer or the Depositor, as applicable,
shall give a second written notice to such Certificateholders to surrender their
Certificates for payment of the purchase price therefor. If within six months
after the second notice any Certificate shall not have been surrendered for
cancellation, the Trustee shall take appropriate steps as directed by the Master
Servicer or the Depositor, as applicable, to contact the Holders of such
Certificates concerning surrender of their Certificates. The costs and expenses
of maintaining the escrow account and of contacting Certificateholders shall be
paid out of the assets which remain in the escrow account. No interest shall
accrue or be payable to any Certificateholder on any amount held in the escrow
account or by the Master Servicer or the Depositor, as applicable, as a result
of such Certificateholder's failure to surrender its Certificate(s) for payment
in accordance with this Section 9.01. Any Certificate that is not surrendered on
the Distribution Date on which a purchase pursuant to this Section 9.01 occurs
as provided above will be deemed to have been purchased and the Holder as of
such date will have no rights with respect thereto except to receive the
purchase price therefor minus any costs and expenses associated with such escrow
account and notices allocated thereto. Any Certificates so purchased or deemed
to have been purchased on such Distribution Date shall remain outstanding
hereunder. The Master Servicer or the Depositor, as applicable, shall be for all
purposes the Holder thereof as of such date.
SECTION 9.02. Termination of REMIC II.
REMIC II shall be terminated on the earlier of the Final
Distribution Date and the date on which it is deemed to receive the last deemed
distributions on the Uncertificated REMIC I Regular Interests and the last
distribution due on the Class A, Class M, Class B and Class R-II Certificates is
made.
SECTION 9.03. Additional Termination Requirements.
(a) In the event the Master Servicer repurchases the Mortgage Loans
as provided in Section 9.01, the Trust Fund shall be terminated in accordance
with the following additional requirements, unless the Master Servicer, at its
own expense, obtains for the Trustee an Opinion of Counsel to the effect that
the failure of the Trust Fund to comply with the require ments of this Section
9.03 will not (i) result in the imposition on the Trust of taxes on "prohibited
-113-
transactions," as described in Section 860F of the Code, or (ii) cause either
REMIC I or REMIC II to fail to qualify as a REMIC at any time that any
Certificate is outstanding:
(i) The Master Servicer shall establish a 90-day liquidation period
for REMIC I and REMIC II, as the case may be, and specify the first day of
such period in a statement attached to the Trust Fund's final Tax Return
pursuant to Treasury regulations Section 1.860F-1. The Master Servicer also
shall satisfy all of the requirements of a qualified liquidation for REMIC
I and REMIC II, as the case may be, under Section 860F of the Code and
regulations thereunder;
(ii) The Master Servicer shall notify the Trustee at the commencement
of such 90-day liquidation period and, at or prior to the time of making of
the final payment on the Certificates, the Trustee shall sell or otherwise
dispose of all of the remaining assets of the Trust Fund in accordance with
the terms hereof; and
(iii) If the Master Servicer or the Depositor is exercising its right
to purchase the assets of the Trust Fund, the Master Servicer shall, during
the 90-day liquidation period and at or prior to the Final Distribution
Date, purchase all of the assets of the Trust Fund for cash; PROVIDED,
HOWEVER, that in the event that a calendar quarter ends after the
commencement of the 90-day liquidation period but prior to the Final
Distribution Date, the Master Servicer or the Depositor shall not purchase
any of the assets of the Trust Fund prior to the close of that calendar
quarter.
(b) Each Holder of a Certificate and the Trustee hereby irrevocably
approves and appoints the Master Servicer as its attorney-in-fact to adopt a
plan of complete liquidation for REMIC I and REMIC II at the expense of the
Trust Fund in accordance with the terms and conditions of this Agreement.
-115-
ARTICLE X
REMIC PROVISIONS
SECTION 10.01. REMIC Administration.
(a) The Trustee shall make an election to treat each of REMIC I and
REMIC II as a REMIC under the Code and, if necessary, under applicable state
law. Each such election will be made on Form 1066 or other appropriate federal
tax or information return (including Form 8811) or any appropriate state return
for the taxable year ending on the last day of the calendar year in which the
Certificates are issued. For the purposes of the REMIC I election in respect of
the Trust Fund, Uncertificated REMIC I Regular Interests shall be designated as
the "regular interests" and the Class R-I Certificates shall be designated as
the sole class of "residual interest" in REMIC I. For the purposes of the REMIC
II election in respect of the Trust Fund, the Class A Certificates, Class M
Certificates and Class B Certificates shall be designated as the "regular
interests" and the Class R-II Certificates shall be designated as the sole class
of "residual interests" in REMIC II. The Master Servicer and the Trustee shall
not permit the creation of any "interests" (within the meaning of Section 860G
of the Code) in REMIC I or REMIC II other than the Uncertificated REMIC I
Regular Interests and the Class R-I Certificates and the REMIC II Certificates,
respectively.
(b) The Closing Date is hereby designated as the "startup day" of the
Trust Fund within the meaning of Section 860G(a)(9) of the Code.
(c) The Trustee shall pay out of its own funds, without any right of
reimbursement, any and all expenses relating to any tax audit of REMIC I or
REMIC II (including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect to REMIC I or REMIC II that
involve the Internal Revenue Service or state tax authorities), other than the
expense of obtaining any tax related Opinion of Counsel except as specified
herein. The Trustee, as agent for REMIC I and REMIC II's tax matters person,
shall (i) act on behalf of REMIC I and REMIC II in relation to any tax matter or
controversy involving the Trust Fund and (ii) represent the Trust Fund in any
administrative or judicial proceeding relating to an examination or audit by any
governmental taxing authority with respect thereto. By their acceptance thereof,
the holder of the largest Percentage Interest of the Residual Certificates
hereby agrees to irrevocably appoint the Trustee or an Affiliate as its agent to
perform all of the duties of the tax matters person for REMIC I and REMIC II.
(d) The Trustee shall prepare, sign and file all of the Tax Returns
in respect of the REMICs created hereunder. The expenses of preparing and filing
such returns shall be borne by the Trustee without any right of reimbursement
therefor. The Master Servicer shall provide
-116-
on a timely basis to the Trustee or its designee such information with respect
to the assets of REMIC I and REMIC II as is in its possession and reasonably
required by the Trustee to enable it to perform its obligations under this
Article X.
(e) The Trustee shall perform on behalf of REMIC I and REMIC II all
reporting and other tax compliance duties that are the responsibility of the
REMIC under the Code, the REMIC Provisions or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, as required by the Code, the REMIC Provisions or other such
compliance guidance, the Trustee shall provide (i) to any Transferor of a
Residual Certificate such information as is necessary for the application of any
tax relating to the transfer of a Residual Certificate to any Person who is not
a Permitted Transferee, (ii) to the Certificateholders such information or
reports as are required by the Code or the REMIC Provisions including reports
relating to interest, original issue discount and market discount or premium
(using the SPA as required) and (iii) to the Internal Revenue Service the name,
title, address and telephone number of the person who will serve as the
representative of REMIC I and REMIC II. The Master Servicer shall provide on a
timely basis to the Trustee such information with respect to the assets of REMIC
I and REMIC II, including, without limitation, the Mortgage Loans, as is in its
possession and reasonably required by the Trustee to enable it to perform its
obligations under this subsection. In addition, the Depositor shall provide or
cause to be provided to the Trustee, within ten (10) days after the Closing
Date, all information or data that the Trustee reasonably determines to be
relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.
(f) The Trustee shall take such action and shall cause either REMIC
created hereunder to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions (and the
Master Servicer shall assist it, to the extent reasonably requested by it). The
Trustee shall not take any action, cause REMIC I and REMIC II to take any action
or fail to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (i) endanger the
status of REMIC I and REMIC II as a REMIC or (ii) result in the imposition of a
tax upon REMIC I and REMIC II (including but not limited to the tax on
prohibited transactions as defined in Section 860F(a)(2) of the Code and the tax
on contributions to a REMIC set forth in Section 860G(d) of the Code) (either
such event, an "Adverse REMIC Event") unless the Trustee has received an Opinion
of Counsel, addressed to the Trustee (at the expense of the party seeking to
take such action but in no event at the expense of the Trustee) to the effect
that the contemplated action will not, with respect to the REMICs created
hereunder, endanger such status or result in the imposition of such a tax, nor
shall the Master Servicer take or fail to take any action (whether or not
authorized hereunder) as to which the Trustee has advised it in writing that it
has received an Opinion of Counsel to the effect that an Adverse REMIC Event
could occur with respect to such action. In
-117-
addition, prior to taking any action with respect to REMIC I and REMIC II or the
assets of REMIC I and REMIC II, or causing REMIC I and REMIC II to take any
action, which is not contemplated under the terms of this Agreement, the Master
Servicer will consult with the Trustee or its designee, in writing, with respect
to whether such action could cause an Adverse REMIC Event to occur with respect
to either REMIC I or REMIC II, and the Master Servicer shall not take any such
action or cause either REMIC I or REMIC II to take any such action as to which
the Trustee has advised it in writing that an Adverse REMIC Event could occur.
The Trustee may consult with counsel to make such written advice, and the cost
of same shall be borne by the party seeking to take the action not permitted by
this Agreement, but in no event shall such cost be an expense of the Trustee. At
all times as may be required by the Code, the Trustee will ensure that
substantially all of the assets of the REMIC created hereunder will consist of
"qualified mortgages" as defined in Section 860G(a)(3) of the Code and
"permitted investments" as defined in Section 860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited
transactions" of the REMICs created hereunder as defined in Section 860F(a)(2)
of the Code, on the "net income from foreclosure property" of the REMIC as
defined in Section 860G(c) of the Code, on any contributions to REMIC I or REMIC
II after the Startup Day therefor pursuant to Section 860G(d) of the Code, or
any other tax is imposed by the Code or any applicable provisions of state or
local tax laws, such tax shall be charged (i) to the Trustee pursuant to Section
10.03 hereof, if such tax arises out of or results from a breach by the Trustee
of any of its obligations under this Article X, (ii) to the Master Servicer
pursuant to Section 10.03 hereof, if such tax arises out of or results from a
breach by the Master Servicer of any of its obligations under Article III or
this Article X, or otherwise, (iii) to the Master Servicer as provided in
Section 3.05 and (iv) against amounts on deposit in the Certificate Account and
shall be paid by withdrawal therefrom to the extent not required to be paid by
the Master Servicer or the Trustee pursuant to another provision of this
Agreement.
(h) On or before April 15 of each calendar year, commencing April
15, 1999, the Trustee shall deliver to the Master Servicer and the Rating Agency
a Certificate from a Responsible Officer of the Trustee stating the Trustee's
compliance with this Article X.
(i) The Trustee shall, for federal income tax purposes, maintain
books and records with respect to REMIC I and REMIC II on a calendar year and on
an accrual basis.
(j) Following the Startup Day, the Trustee shall not accept any
contributions of assets to REMIC I and REMIC II other than in connection with
any Qualified Substitute Mortgage Loan delivered in accordance with Section 2.04
unless it shall have received an Opinion of Counsel to the effect that the
inclusion of such assets in the REMIC will not cause either REMIC I or REMIC II
to fail to qualify as a REMIC at any time that any Certificates are
-118-
outstanding or subject either REMIC to any tax under the REMIC Provisions or
other applicable provisions of federal, state and local law or ordinances.
(k) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which either REMIC I and REMIC II will receive a fee or other
compensation for services nor permit the REMIC to receive any income from assets
other than "qualified mortgages" as defined in Section 860G(a)(3) of the Code or
"permitted investments" as defined in Section 860G(a)(5) of the Code.
SECTION 10.02. Prohibited Transactions and Activities.
None of the Depositor, the Master Servicer or the Trustee shall
sell, dispose of or substitute for any of the Mortgage Loans (except in
connection with (i) the foreclosure of a Mortgage Loan, including but not
limited to, the acquisition or sale of a Mortgaged Property acquired by deed in
lieu of foreclosure, (ii) the bankruptcy of the Trust Fund, (iii) the
termination of REMIC I and REMIC II pursuant to Article IX of this Agreement,
(iv) a substitution pursuant to Article II of this Agreement or (v) a purchase
of Mortgage Loans pursuant to Article II or III of this Agreement), nor acquire
any assets for either REMIC I or REMIC II (other than REO Property acquired in
respect of a defaulted Mortgage Loan), nor sell or dispose of any investments in
the Custodial Account or the Certificate Account for gain, nor accept any
contributions to REMIC I or REMIC II after the Closing Date (other than a
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.03),
unless it has received an Opinion of Counsel, addressed to the Trustee (at the
expense of the party seeking to cause such sale, disposition, substitution,
acquisition or contribution but in no event at the expense of the Trustee) that
such sale, disposition, substitution, acquisition or contribution will not (a)
affect adversely the status of either REMIC I or REMIC II as a REMIC or (b)
cause either REMIC I or REMIC II to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.
SECTION 10.03. Master Servicer and Trustee Indemnification.
(a) The Trustee agrees to indemnify REMIC I and REMIC II, the
Depositor, and the Master Servicer for any taxes and costs including, without
limitation, any reasonable attorneys fees imposed on or incurred by REMIC I and
REMIC II, the Depositor or the Master Servicer, as a result of a breach of the
Trustee's covenants set forth in this Article X.
(b) The Master Servicer agrees to indemnify REMIC I and REMIC II,
the Depositor and the Trustee for any taxes and costs including, without
limitation, any reasonable attorneys' fees imposed on or incurred by either
REMIC I or REMIC II, the Depositor or the Trustee, as a result of a breach of
the Master Servicer's covenants set forth in Article III or this Article X.
-119-
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
This Agreement may be amended from time to time by the Depositor,
the Master Servicer and the Trustee, without the consent of any of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement any
provisions herein which may be defective or incon sistent with any other
provisions herein or to correct any error, (iii) to amend this Agreement in any
respect subject to the provisions in clauses (A) and (B) below, or (iv) if such
amendment, as evidenced by an Opinion of Counsel (provided by the Person
requesting such amendment) delivered to the Trustee, is reasonably necessary to
comply with any requirements imposed by the Code or any successor or amendatory
statute or any temporary or final regulation, revenue ruling, revenue procedure
or other written official announcement or interpretation relating to federal
income tax laws or any proposed such action which, if made effective, would
apply retroactively to the Trust Fund at least from the effective date of such
amendment; provided that such action (except any amendment described in (iv)
above) shall not adversely affect in any material respect the interests of any
Certificateholder (other than Certificateholders who shall consent to such
amendment), as evidenced by (A) an Opinion of Counsel (provided by the Person
requesting such amendment) delivered to the Trustee, and (B) a letter from each
Rating Agency, confirming that such amendment shall not cause it to lower its
rating on any of the Certificates.
This Agreement may also be amended from time to time by the
Depositor, the Master Servicer and the Trustee and Holders of Certificates
entitled to at least 66-2/3% of the Voting Rights for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders of
Certificates; provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate, (ii) adversely affect in any material
respect the interests of the Holders of any Class of Certificates in a manner
other than as described in (i), without the consent of the Holders of
Certificates of such Class evidencing at least 66-2/3% of the Voting Rights of
such Class, or (iii) reduce the aforesaid percentage of Certificates the Holders
of which are required to consent to any such amendment, without the consent of
the Holders of all Certificates then outstanding. Notwithstand ing any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 11.01, Certificates registered in the name of
the Seller or the Master Servicer or any affiliate thereof shall be entitled to
Voting Rights with respect to matters described in (i), (ii) and (iii) of this
paragraph.
-120-
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (provided by the Person requesting
such amendment) to the effect that such amendment will not result in the
imposition of any tax on either REMIC I or REMIC II pursuant to the REMIC
Provisions or cause either REMIC I or REMIC II to fail to qualify as a REMIC at
any time that any Certificates are outstanding.
Promptly after the execution of any such amendment the Trustee shall
furnish a copy of such amendment or a written statement describing the amendment
to each Certificate holder, with a copy to the Rating Agencies.
It shall not be necessary for the consent of Certificateholders
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 Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
Prior to executing any amendment pursuant to this Section, the
Trustee shall be entitled to receive an Opinion of Counsel (provided by the
Person requesting such amendment) to the effect that such amendment is
authorized or permitted by this Agreement. The cost of an Opinion of Counsel
delivered pursuant to this Section 11.01 shall be an expense of the party
requesting such amendment, but in any case shall not be an expense of the
Trustee.
The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.
SECTION 11.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer at the expense of the Certificateholders, but only upon
direction of the Trustee accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counter parts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
-121-
SECTION 11.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a notice of an Event of Default, or
of a default by the Seller or the Trustee in the performance of any obligation
hereunder, and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates entitled to at least 51% 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 hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request 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 Certificateholder with
every other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
-122-
SECTION 11.04. Governing Law.
This Agreement and the Certificates shall be construed in accordance
with the laws of the State of New York and the obligations, rights and remedies
of the parties hereunder shall be determined in accordance with such laws.
SECTION 11.05. Notices.
All demands, notices and direction hereunder shall be in writing and
shall be deemed effective upon receipt when delivered to (a) in the case of the
Depositor, Impac Funding, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or such other address as may hereafter be
furnished to the other parties hereto in writing; (b) in the case of Impac
Funding, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or such other address as may hereafter be furnished to the other
parties hereto in writing; (c) in the case of the Trustee, at its Corporate
Trust Office, or such other address as may hereafter be furnished to the other
parties hereto in writing; or (d) in the case of the Rating Agencies, S&P, ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention: Residential Mortgage Surveillance
Group and Fitch, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Mortgage-Backed Surveillance. Any notice required or permitted to be
mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the Certificate
holder receives such notice.
SECTION 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 11.07. Successors and Assigns; Third Party Beneficiary.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the parties hereto, and
all such provisions shall inure to the benefit of the Trustee and the
Certificateholders.
SECTION 11.08. Article and Section Headings.
-123-
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.
SECTION 11.09. Notice to Rating Agencies.
The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency referred to below with respect to each of the following of
which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been cured;
3. The resignation or termination of the Master Servicer or the
Trustee;
4. The repurchase or substitution of Mortgage Loans pursuant to
Section 2.03;
5. The final payment to Certificateholders; and
6. Any change in the location of the Custodial Account or the
Certificate Account.
In addition, the Trustee and the Master Servicer shall promptly
furnish to the Rating Agency copies of the following:
1. Each report to Certificateholders described in Section 4.02; and
2. Each annual independent public accountants' servicing report
received as described in Section 3.20.
Any such notice pursuant to this Section 11.09 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 (i) in the
case of Fitch, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Mortgage-Backed Surveillance, (ii) in the case of Standard & Poor's, ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or, in each case, such other
address as either such Rating Agency may designate in writing to the parties
thereto.
IN WITNESS WHEREOF, the Depositor, the Master Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized all as of the day and year first above written.
IMPAC SECURED ASSETS CORP.,
Depositor
By:
---------------------------
IMPAC FUNDING CORPORATION,
Master Servicer
By:
---------------------------
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A.,
Trustee
By:
---------------------------
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of June, 1998 before me, a notary public in and for
said State, personally appeared _______________________, known to me to be the
[Senior] Vice President of Impac Secured Assets Corp., the corporation that
executed the within instrument, and also known to me to be the persons who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF ________ )
On the ____ day of June, 1998 before me, a notary public in and for
said State, personally appeared _________________________, known to me to be the
________________________ of Impac Funding Corporation, and also known to me to
be the person who executed the within instrument as a duly authorized officer of
said corporation on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 29th day of June, 1998, before me, a notary public in and for
said State, personally appeared ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, known to me to be an Assistant
Secretary of Bankers Trust Company of California, N.A., the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]