EXHIBIT 99.1
ASSET BACKED SECURITIES CORPORATION
Depositor
DLJ MORTGAGE CAPITAL, INC.
Seller
FAIRBANKS CAPITAL CORP.
Servicer
and
XXXXX FARGO BANK MINNESOTA, N.A.
Trustee
_________________________________________
POOLING AND SERVICING AGREEMENT
Dated as of May 1, 2002
_________________________________________
Asset Backed Securities Corporation Home Equity Loan Trust 2002-HE2
Asset Backed Pass-Through Certificates, Series 2002-HE2
Table of Contents
Page
----
ARTICLE I DEFINITIONS........................................................3
SECTION 1.01. Defined Terms.............................................3
SECTION 1.02. Allocation of Certain Interest Shortfalls................43
SECTION 1.03. Designation of Interests in REMIC........................44
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES..50
SECTION 2.01. Conveyance of Mortgage Loans.............................50
SECTION 2.02. Acceptance of REMIC I by the Trustee.....................55
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by the
Originators, the Seller or the Depositor; Payment of
Prepayment Charges in the Event of Breach................57
SECTION 2.04. Representations and Warranties of the Depositor..........60
SECTION 2.05. Representations, Warranties and Covenants of the
Servicer and the Seller..................................62
SECTION 2.06. Issuance of Class R-I Certificates.......................65
SECTION 2.07. Conveyance of REMIC I Regular Interests; Acceptance of
REMIC II by the Trustee..................................66
SECTION 2.08. Conveyance of REMIC II Regular Interests; Acceptance of
REMIC III by the Trustee.................................66
SECTION 2.09. Conveyance of the REMIC III Regular Interest; Acceptance
of the REMIC IV by the Trustee...........................66
SECTION 2.10. Conveyance of REMIC IV Regular Interests; Acceptance
of REMIC V by the Trustee................................66
SECTION 2.11. Conveyance of REMIC IV Regular Interests; Acceptance
of REMIC V by the Trustee................................67
ARTICLE III ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS..............67
SECTION 3.01. Servicer to Act as Servicer..............................67
SECTION 3.02. Sub-Servicing Agreements Between the Servicer and
Sub-Servicers............................................69
SECTION 3.03. Successor Sub-Servicers..................................70
SECTION 3.04. Liability of the Servicer................................70
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and
Trustee or Certificateholders............................70
SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements
by Trustee...............................................71
SECTION 3.07. Collection of Certain Mortgage Loan Payments.............71
SECTION 3.08. Sub-Servicing Accounts...................................72
SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.......................................72
SECTION 3.10. Collection Account; Distribution Account and
Pre-Funding Account......................................73
SECTION 3.11. Withdrawals from the Collection Account and
Distribution Account.....................................76
SECTION 3.12. Investment of Funds in the Collection Account and the
Distribution Account.....................................78
SECTION 3.13. RESERVED.................................................79
SECTION 3.14. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage..........................79
SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption
Agreements...............................................80
SECTION 3.16. Realization Upon Defaulted Mortgage Loans................82
SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files..........84
SECTION 3.18. Servicing Compensation...................................85
SECTION 3.19. Reports to the Trustee; Collection Account Statements
and Other Reporting Obligations..........................85
SECTION 3.20. Statement as to Compliance...............................86
SECTION 3.21. Independent Public Accountants' Servicing Report.........86
SECTION 3.22. Access to Certain Documentation..........................87
SECTION 3.23. Title, Management and Disposition of REO Property........87
SECTION 3.24. Obligations of the Servicer in Respect of Prepayment
Interest Shortfalls......................................90
SECTION 3.25. Obligations of the Servicer in Respect of Mortgage
Rates and Monthly Payments...............................91
SECTION 3.26. Net WAC Fund; Yield Maintenance Agreement................91
SECTION 3.27. Servicing Performance Evaluations........................92
SECTION 3.28. Advance Facility.........................................93
ARTICLE IV PAYMENTS TO CERTIFICATEHOLDERS...................................96
i
SECTION 4.01. Distributions...........................................96
SECTION 4.02. Statements to Certificateholders.......................101
SECTION 4.03. Remittance Reports; P&I Advances.......................104
SECTION 4.04. Allocation of Realized Losses..........................106
SECTION 4.05. Compliance with Withholding Requirements...............107
SECTION 4.06. Commission Reporting...................................107
SECTION 4.07. Early Termination Fund.................................107
ARTICLE V THE CERTIFICATES................................................108
SECTION 5.01. The Certificates.......................................108
SECTION 5.02. Registration of Transfer and Exchange of Certificates..110
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates......115
SECTION 5.04. Persons Deemed Owners..................................116
SECTION 5.05. Certain Available Information..........................116
ARTICLE VI THE DEPOSITOR AND THE SERVICER.................................117
SECTION 6.01. Liability of the Depositor and the Servicer............117
SECTION 6.02. Merger or Consolidation of the Depositor or
the Servicer...........................................117
SECTION 6.03. Limitation on Liability of the Depositor,
the Servicer and Others................................117
SECTION 6.04. Limitation on Resignation of the Servicer..............118
SECTION 6.05. Rights of the Depositor in Respect of the Servicer.....119
ARTICLE VII DEFAULT.......................................................119
SECTION 7.01. Servicer Events of Default.............................119
SECTION 7.02. Trustee to Act; Appointment of Successor...............121
SECTION 7.03. Notification to Certificateholders.....................123
SECTION 7.04. Waiver of Servicer Events of Default...................123
ARTICLE VIII CONCERNING THE TRUSTEE.......................................123
SECTION 8.01. Duties of Trustee......................................123
SECTION 8.02. Certain Matters Affecting the Trustee..................124
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans..126
SECTION 8.04. Trustee May Own Certificates...........................126
SECTION 8.05. Fees and Expenses of the Trustee.......................126
SECTION 8.06. Eligibility Requirements for Trustee...................128
SECTION 8.07. Resignation and Removal of the Trustee.................128
SECTION 8.08. Successor Trustee......................................129
SECTION 8.09. Merger or Consolidation of Trustee.....................129
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee..........129
SECTION 8.11. [Reserved].............................................130
SECTION 8.12. Appointment of Office or Agency........................130
SECTION 8.13. Representations and Warranties.........................131
SECTION 8.14. Yield Maintenance Agreement............................131
ARTICLE IX TERMINATION....................................................131
SECTION 9.01. Termination Upon Repurchase or Liquidation of All
Mortgage Loans.........................................131
SECTION 9.02. Additional Termination Requirements....................133
ARTICLE X REMIC PROVISIONS................................................134
SECTION 10.01. REMIC Administration...................................134
SECTION 10.02. Prohibited Transactions and Activities.................138
SECTION 10.03. Servicer and Trustee Indemnification...................138
ARTICLE XI MISCELLANEOUS PROVISIONS.......................................138
SECTION 11.01. Amendment..............................................138
SECTION 11.02. Recordation of Agreement; Counterparts.................139
ii
SECTION 11.03. Limitation on Rights of Certificateholders.............140
SECTION 11.04. Governing Law..........................................141
SECTION 11.05. Notices................................................141
SECTION 11.06. Severability of Provisions.............................141
SECTION 11.07. Notice to Rating Agencies and the Counterparty.........142
SECTION 11.08. Article and Section References.........................143
SECTION 11.09. Third Party Rights.....................................143
SECTION 11.10. Grant of Security Interest.............................143
SECTION 11.11. Protection of Assets...................................144
iii
Exhibits
---------
Exhibit A-1 Form of Class A1 Certificates
Exhibit A-2 Form of Class A2 Certificates
Exhibit A-3 Form of Class M1, M2 Certificates
Exhibit A-4 Form of Class B Certificate
Exhibit A-5 Form of Class X Certificate
Exhibit A-6 Form of Class P Certificate
Exhibit A-7 Form of Class A-IO Certificate
Exhibit A-8 Form of Class B-IO Certificate
Exhibit A-9 Form of Class R Certificate
Exhibit B Representations and Warranties of the Seller with respect
to the DLJMC Mortgage Loans
Exhibit C-1 Form of Trust Receipt and Initial Certification
Exhibit C-2 Form of Truste Receipt and Final Certification
Exhibit D Form of Mortgage Loan Purchase Agreement
Exhibit E-1 Form of Request for Release
Exhibit E-2 Form of Request for Release
Exhibit F-1 Forms of Transferor/Transferee Representation Letter
Exhibit F-2 Form of Transfer Affidavit and Agreement
Exhibit G Form of ERISA Certification
Exhibit H Form of Subsequent Transfer Agreement
Exhibit I Letter Agreement
Exhibit J Performance Standards
Schedules
Schedule 1 Mortgage Loan Schedule
Part A - New Century Mortgage Corporation
Part B - WMC Mortgage Corp.
Part C - Long Beach Mortgage Company
Part D - DLJMC Mortgage Loans
(1) Cityscape Corp.
(2) Equicon Corporation
Schedule 2. Prepayment Charge Schedule
iv
This Pooling and Servicing Agreement, is dated and effective as of May 1,
2002, among ASSET BACKED SECURITIES CORPORATION, as Depositor, DLJ Mortgage
Capital, Inc., as Seller, FAIRBANKS CAPITAL CORP., as Servicer and XXXXX FARGO
BANK MINNESOTA, N.A., as Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell 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 multiple REMICs (as defined herein) created hereunder. The Trust
Fund will consist of a segregated pool of assets consisting of the Mortgage
Loans and certain other related assets subject to this Agreement.
As of the Cut-off Date, the Initial Mortgage Loans had an
aggregate Stated Principal Balance equal to $717,372,491.
Set forth below are designations of Classes of Certificates to the categories
used herein.
LIBOR Certificates.................................... Class A and Subordinated Offered Certificates.
Book-Entry Certificates............................... All Classes of Certificates other than the
Physical Certificates.
Class A Certificates.................................. Class A1 and Class A2 Certificates.
Class P Certificates.................................. Class P Certificates
Mezzanine Certificates................................ Class M1 and Class M2 Certificates.
Non-Offered Certificates.............................. Class B-IO, Class X, Class P and Residual
Certificates.
Offered Certificates.................................. Class A, Class A-IO and Subordinated Offered
Certificates.
Physical Certificates................................. Class B-IO, Class X, Class P and Residual
Certificates.
Regular Certificates.................................. All Classes of Certificates other than the Residual
Certificates.
Residual Certificates................................. Class R Certificates.
Subordinated Certificates............................. Class X, Class B-IO and Subordinated Offered
Certificates.
Subordinated Offered Certificates..................... Mezzanine Certificates and Class B Certificates.
2
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, including, without
limitation, in the Preliminary Statement hereto, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article.
"Accepted Servicing Practices": With respect to any Mortgage
Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage
Loan in the jurisdiction where the related Mortgaged Property is located.
"Accrued Certificate Interest": With respect to any Class of
Offered Certificates or the Class B-IO Certificates and any Distribution Date,
interest accrued during the related Interest Accrual Period at the related
Pass-Through Rate for such Class for such Distribution Date on the Certificate
Principal Balance, in the case of the Class A Certificates and the
Subordinated Offered Certificates, or on the respective Notional Amount, in
the case of the Class A-IO and Class B-IO Certificates, of such Class
immediately prior to such Distribution Date. With respect to the Class X
Certificates and any Distribution Date, the Accrued Certificate Interest shall
equal the amount of interest that accrues during the related Interest Accrual
Period which is equal to the product of (i) a notional amount, equal to the
aggregate Stated Principal Balance of the Mortgage Loans as of that
Distribution Date, and (ii) the Pass-Through Rate for such Class for such
Distribution Date as set forth in footnote (3) to "REMIC V" under Section 1.03
herein. The Class P and Class R Certificates are not entitled to distributions
in respect of interest and, accordingly, will not accrue interest. To the
extent the Interest Remittance Amount on any Distribution Date is less than
the aggregate Accrued Certificate Interest on such Distribution Date for the
Offered Certificates and the Class B-IO Certificates, Accrued Certificate
Interest with respect to such Distribution Date for such Classes of
Certificates shall be reduced by an amount equal to the portion allocable to
such Certificate pursuant to Section 1.02 hereof of the sum of (a) the
aggregate Prepayment Interest Shortfall, if any, for such Distribution Date to
the extent not covered by payments pursuant to Section 3.24 and (b) the
aggregate amount of any Relief Act Interest Shortfall, if any, for such
Distribution Date.
"Adjustable Rate Mortgage Loan": Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate that is
subject to adjustment.
"Adjusted Net WAC": As to any Distribution Date, will be a
per annum rate equal to the Net WAC Rate as of the first day of the related
Due Period for such date minus the Strip Amount Rate for such date. This rate
will be adjusted to correspond with the day counting convention used for the
Certificates. For federal income tax purposes, a per annum rate equal to the
weighted average of the REMIC I Regular Interest where the Class T1-A Interest
is equal to
3
Net WAC and each Class T1-SA Regular Interest has a rate equal to,
from the Closing Date until the Rate Change Date, Net WAC minus 0.2175% and
thereafter, the Net WAC Rate. Such rate shall be adjusted, if necessary, for
the appropriate day counting convention.
"Adjustment Date": With respect to each Adjustable Rate
Mortgage Loan, the day of the month on which the Mortgage Rate of such
Mortgage Loan changes pursuant to the related Mortgage Note. The first
Adjustment Date following the Cut-off Date as to each Mortgage Loan is set
forth in the Mortgage Loan Schedule.
"Advance Facility": As defined in Section 3.28(a) herein.
"Advance Facility Notice": As defined in Section 3.28(b)
herein.
"Advance Facility Trustee": As defined in Section 3.28(b)
herein.
"Advance Reimbursement Amounts": As defined in Section
3.28(a) herein.
"Advancing Person": As defined in Section 3.28(a) herein.
"Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Aggregate Collateral Balance": As of any date of
determination will be equal to the aggregate Stated Principal Balance of the
Mortgage Loans and any REO Properties owned by the Trust plus the amount, if
any, then on deposit in the Pre-Funding Account.
"Aggregate Subsequent Transfer Amount": With respect to any
Subsequent Transfer Date, the aggregate Stated Principal Balances as of the
applicable Cut-off Date of the Subsequent Mortgage Loans conveyed on such
Subsequent Transfer Date, as listed on the revised Mortgage Loan Schedule
delivered pursuant to Section 2.01(d); provided, however, that such amount
shall not exceed the amount on deposit in the Pre-Funding Account.
"Agreement": This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
"Applicable Regulations" : As to any Mortgage Loan, all
federal, state and local laws, statutes, rules and regulations applicable
thereto.
"Applied Realized Loss Amount": With respect to any
Distribution Date, the amount, if any, by which, (i) the aggregate Certificate
Principal Balance of the LIBOR Certificates after distributions of principal
on such Distribution Date exceeds the Aggregate Collateral Balance as of the
last day of the immediately preceding Due Period.
4
"Assignment": An assignment of Mortgage, notice of transfer
or equivalent instrument, in recordable form (excepting therefrom, if
applicable, the mortgage recordation information which has not been required
pursuant to Section 2.01 hereof or returned by the applicable recorder's
office and/or the assignee's name), 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, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering Mortgages secured by Mortgaged Properties located in the same county,
if permitted by law.
"Assignment and Assumption Agreement": That certain
assignment and assumption agreement dated as of the Cut-off Date, by and
between the Seller, as assignor and the Depositor, as assignee, relating to
the Mortgage Loans.
"Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (1) the sum of (a) the aggregate of the
amounts on deposit in the Collection Account and Distribution Account as of
the close of business on the related Determination Date, (b) the aggregate of
any amounts received in respect of an REO Property withdrawn from any REO
Account and deposited in the Distribution Account for such Distribution Date
pursuant to Section 3.23, (c) the aggregate of any amounts deposited in the
Distribution Account by the Servicer in respect of Prepayment Interest
Shortfalls for such Distribution Date pursuant to Section 3.24 and (d) the
aggregate of any P&I Advances made by the Servicer for such Distribution Date
pursuant to Section 4.03 reduced (to not less than zero) by (2) the sum of (x)
the portion of the amount described in clause (1)(a) above that represents (i)
Monthly Payments on the Mortgage Loans received from a Mortgagor on or prior
to the Determination Date but due during any Due Period subsequent to the
related Due Period, (ii) Principal Prepayments on the Mortgage Loans received
after the related Prepayment Period (together with any interest payments
received with such Principal Prepayments to the extent they represent the
payment of interest accrued on the Mortgage Loans during a period subsequent
to the related Prepayment Period), (iii) Liquidation Proceeds and Insurance
Proceeds received in respect of the Mortgage Loans after the related
Prepayment Period, (iv) amounts reimbursable or payable to the Depositor, an
Originator, the Servicer, the Trustee, the Seller or any Sub-Servicer pursuant
to Section 3.11 or Section 3.12 or otherwise payable in respect of
Extraordinary Trust Fund Expenses, (v) amounts deposited in the Collection
Account or the Distribution Account in error, and (vi) the amount of any
Prepayment Charges collected by the Servicer in connection with the voluntary
Principal Prepayment in full of any of the Mortgage Loans or the Servicer
Prepayment Charge Payment Amount.
"Balloon Loan": Any Mortgage Loan which, by its terms, does
not fully amortize the principal balance thereof by its stated maturity and
thus requires a payment at the stated maturity larger than the Monthly
Payments due thereunder.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title
11 of the United States Code), as amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a
Realized Loss resulting from a Deficient Valuation (i.e. "principal cramdown")
or Debt Service Reduction (i.e. "interest cramdown").
5
"Book-Entry Certificate": As specified in the Preliminary
Statement.
"Book-Entry Custodian": The custodian appointed pursuant to
Section 5.01 herein.
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings and loan institutions in the State of
California, the State of New York, the State of Washington, the State of
Maryland, the State of Minnesota, the State of Delaware, the State of Texas,
the State of Utah or the city in which the Corporate Trust Office of the
Trustee is located, are authorized or obligated by law or executive order to
be closed.
"Carryover Termination Payment": For any Distribution Date,
the portion of any Termination Payment payable by the Trust to the
Counterparty previously due on a prior Distribution Date that remains unpaid
on such Distribution Date plus interest thereon at the Default Rate for the
period from the date such Termination Payment was due but unpaid to but
excluding the date such amount has been paid (such interest to be compounded
daily).
"Certificate": Any one of the certificates issued under this
Agreement in substantially the forms attached hereto as Exhibits A-1 through
A-9.
"Certificate Factor": With respect to any Class of LIBOR
Certificates as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which is the aggregate Certificate
Principal Balance of such Class of Certificates on such Distribution Date
(after giving effect to any distributions of principal and allocations of
Realized Losses in reduction of the Certificate Principal Balance of such
Class of Certificates to be made on such Distribution Date), and the
denominator of which is the initial aggregate Certificate Principal Balance of
such Class of Certificates as of the Closing Date.
"Certificate Margin": As to any Class of LIBOR Certificates,
the respective amount set forth below:
Certificate Margin
Class (1) (2)
------------ ------------------------------- -------------------
A1 0.300% 0.600%
A2 0.310% 0.620%
M1 0.700% 1.050%
M2 1.130% 1.695%
B 2.150% 3.225%
6
(1) To and including the Optional Termination Date.
(2) After the Optional Termination Date.
"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 the Depository or on the books of a Depository
Participant or on the books of an indirect participating brokerage firm for
which a Depository Participant acts as agent.
"Certificate Principal Balance": With respect to any Class
of Certificates, other than the Class R, Class X, Class A-IO and Class B-IO
Certificates, as of any date of determination, the Certificate Principal
Balance of such Class on the Distribution Date immediately prior to such date
of determination, minus all distributions allocable to principal made thereon
and Realized Losses allocated thereto on the immediately prior Distribution
Date (or, in the case of any date of determination up to and including the
first Distribution Date, the initial Certificate Principal Balance of such
Class, as stated on the face thereof). The Class A-IO, Class B-IO, Class X and
the Class R Certificates do not have a Certificate Principal Balance.
"Certificate Register" and "Certificate Registrar": The
register maintained and the registrar appointed pursuant to Section 5.02
herein.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not 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 Servicer or any Affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it 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 may
conclusively rely upon a certificate of the Depositor or the Servicer in
determining whether a Certificate is held by an Affiliate thereof. 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.
"Cityscape": Cityscape Corp.
"Cityscape Mortgage Loans": The Mortgage Loans originated by
Cityscape and listed on Schedule 1, Part D(1) hereto.
"Class": All of the Certificates bearing the same class
designation as set forth in the Preliminary Statement.
"Class A-IO Notional Amount": With respect to the initial
Distribution Date, a notional amount equal to $112,180,000 and, for any
Distribution Date thereafter, will equal the lesser of (a) the aggregate
principal balance of the Mortgage Loans as of the first day of the
7
month of such Distribution Date (prior to giving effect to Monthly Payments
due on such date) and (b) the notional amount set forth in the following table:
Class A-IO Class A-IO
Notional Distribution Notional
Distribution Date Amount ($) Date Amount ($)
-------------------- ------------- --------------- ------------
June 2002 112,180,000 September 2003 76,200,000
July 2002 109,400,000 October 2003 74,400,000
August 2002 106,600,000 November 2003 72,400,000
September 2002 103,900,000 December 2003 70,600,000
October 2002 101,200,000 January 2004 68,800,000
November 2002 98,700,000 February 2004 67,100,000
December 2002 96,200,000 March 2004 65,300,000
January 2003 93,700,000 April 2004 63,700,000
February 2003 91,300,000 May 2004 62,100,000
March 2003 89,000,000 June 2004 60,500,000
April 2003 86,700,000 July 2004 58,900,000
May 2003 84,600,000 August 2004 57,400,000
June 2003 82,400,000 September 2004 56,000,000
July 2003 80,300,000 October 2004 54,500,000
August 2003 78,200,000 November 2004 53,200,000
After the Distribution Date in November 2004, the Class A-IO Notional Amount
will equal $0.
"Class A1 Percentage": As to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the Principal
Remittance Amount calculated solely with respect to the Mortgage Loans in
Subgroup 1 for such Distribution Date and the denominator of which is the
Principal Remittance Amount for such Distribution Date.
"Class A2 Percentage": As to any Distribution Date, 100%
minus the Class A1 Percentage for such Distribution Date.
"Class A Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the aggregate Certificate Principal
Balance of the Class A Certificates immediately prior to such Distribution
Date over (y) the lesser of (A) the product of (i) 63.50% and (ii) the
Aggregate Collateral Balance as of the last day of the related Due Period and
(B) the Aggregate Collateral Balance as of the last day of the related Due
Period minus $4,286,862.
"Class B Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution
Date), (ii) the Certificate Principal Balance of the Class M1 Certificates
(after taking into account the payment of the Class M1 Principal Distribution
Amount on such Distribution Date), (iii) the Certificate Principal Balance of
the Class M2 Certificates (after taking into account the payment of the Class
M2 Principal Distribution Amount on such Distribution Date) and (iv) the
Certificate Principal Balance of the Class B Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 96.50%
and (ii) the Aggregate Collateral Balance as of the last day of the related
Due Period and (B) the Aggregate Collateral Balance as of the last day of the
related Due Period minus $4,286,862.
8
"Class Exemption": A class exemption granted by the U.S.
Department of Labor, which provides relief from certain of the prohibited
transaction provisions of ERISA and the related excise tax provisions of the
Code.
"Class M1 Principal Distribution Amount": With respect to
any Distribution Date, the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Class A Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date) and (ii) the Certificate Principal Balance of the Class M1
Certificates immediately prior to such Distribution Date over (y) the lesser
of (A) the product of (i) 78.00% and (ii) the Aggregate Collateral Balance as
of the last day of the related Due Period and (B) the Aggregate Collateral
Balance as of the last day of the related Due Period minus $4,286,862.
"Class M2 Principal Distribution Amount": With respect to
any Distribution Date, the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Class A Certificates (after taking into
account the payment of the related Class A Principal Distribution Amount on
such Distribution Date), (ii) the Certificate Principal Balance of the Class
M1 Certificates (after taking into account the payment of the Class M1
Principal Distribution Amount on such Distribution Date) and (iii) the
Certificate Principal Balance of the Class M2 Certificates immediately prior
to such Distribution Date over (y) the lesser of (A) the product of (i) 88.50%
and (ii) the Aggregate Collateral Balance as of the last day of the related
Due Period and (B) the Aggregate Collateral Balance as of the last day of the
related Due Period minus $4,286,862.
"Class X Distribution Amount": With respect to any
Distribution Date the sum of (i) the Overcollateralization Reduction Amount
for that Distribution Date, if any, remaining after the making of all
applications, transfers and disbursements described in Section
4.01(a)(3)(i)-(xiv) and (ii) the product of (i) a notional amount, equal to
the aggregate Stated Principal Balance of the Mortgage Loans as of that
Distribution Date, and (ii) the Pass-Through Rate for such Class for such
Distribution Date as set forth in footnote (3) to "REMIC V" under Section 1.03
herein.
"Closing Date": May 30, 2002.
"Code": The Internal Revenue Code of 1986, including any
successor or amendatory provisions.
"Collection Account": The account or accounts created and
maintained by the Servicer pursuant to Section 3.10(a), which shall be
entitled "Fairbanks Capital Corp., as Servicer for Xxxxx Fargo Bank Minnesota,
N.A., as Trustee, in trust for the registered holders of Asset Backed
Securities Corporation Home Equity Loan Trust 2002-HE2, Series 2002-HE2". The
Collection Account must be an Eligible Account.
"Commission": The Securities and Exchange Commission.
"Compensating Interest": As defined in Section 3.24 hereof.
"Controlling Person": The majority of the Percentage
Interest of the Holders of Class X Certificates.
9
"Corporate Trust Office": The principal corporate trust
office of the Trustee at which at any particular time its corporate trust
business in connection with this Agreement shall be administered, which
offices at the date of the execution of this instrument is located: (i) for
certificate transfer purposes, at Xxxxx Fargo Bank Minnesota, N.A., Xxxxx
Xxxxxx xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: ABSC
2002-HE2, and (ii) for all other purposes at 0000 Xxx Xxxxxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxx 00000-0000, Attention: Client Manager - ABSC 2002-HE2, or
at such other address as the Trustee may designate from time to time by notice
to the Certificateholders, the Depositor, the Servicer, and the Trustee.
"Corresponding Classes of Certificates": With respect to
each REMIC Regular Interest, any Class of Certificates appearing opposite such
REMIC Regular Interest in Section 1.03 hereof.
"Counterparty": Credit Suisse First Boston International, or
any successor in interest thereto under the Yield Maintenance Agreement.
"Credit Enhancement Percentage": For any Distribution Date,
the percentage obtained by dividing (x) the sum of (i) the aggregate
Certificate Principal Balances of the Subordinated Offered Certificates (after
giving effect to the distribution of the Principal Distribution Amount on such
Distribution Date) and (ii) the Overcollateralized Amount by (y) the Aggregate
Collateral Balance as of the last day of the related Due Period.
"Custodian": A custodian which is appointed pursuant to a
Custodial Agreement. Any Custodian so appointed shall act as agent on behalf
of the Trustee, and shall be compensated by the Trustee or, in the case of the
Long Beach Mortgage Loans, the Depositor. The Trustee shall remain at all
times responsible under the terms of this Agreement, notwithstanding the fact
that certain duties have been assigned to a Custodian. The initial Custodians
are, with respect to the Mortgage Loans other than the Long Beach Mortgage
Loans, US Bank National Association, and, with respect to the Long Beach
Mortgage Loans, JPMorgan Chase Bank.
"Custodial Agreement": Any custodial agreement between the
Trustee and the related Custodian providing for the safekeeping of any
documents or instruments referred to in Section 2.01 on behalf of the
Certificateholders.
"Cut-off Date": With respect to each Initial Mortgage Loan,
May 1, 2002. With respect to each Mortgage Loan that is a Subsequent Mortgage
Loan, the applicable Subsequent Transfer Date. With respect to all Qualified
Substitute Mortgage Loans, their respective dates of substitution. References
herein to the "Cut-off Date," when used with respect to more than one Mortgage
Loan, shall be to the respective Cut-off Dates for such Mortgage Loans.
"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 resulting from a Deficient Valuation.
"Default Rate": As defined in the Yield Maintenance
Agreement.
10
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent
jurisdiction in an amount less than the then outstanding principal balance of
the Mortgage Loan, which valuation results from a proceeding initiated under
the Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.01(b).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
"Delinquency Percentage": With respect to the last day of a
Due Period, the percentage equivalent of a fraction, the numerator of which is
the aggregate Stated Principal Balance of all Mortgage Loans that, as of the
last day of the previous calendar month, are 60 or more days Delinquent, are
in foreclosure, have been converted to REO Properties or have been discharged
by reason of bankruptcy, and the denominator of which is the sum of (x) the
aggregate Stated Principal Balance of the Mortgage Loans and REO Properties of
the last day of the previous calendar month and (y) the amount on deposit in
the Pre-Funding Account on such date.
"Delinquent": A Mortgage Loan is "Delinquent" if any monthly
payment due on a Due Date is not made by the close of business on the next
scheduled Due Date for that Mortgage Loan. A Mortgage Loan is "30 days
Delinquent" if the monthly payment has not been received by the close of
business on the corresponding day of the month immediately succeeding the
month in which that monthly payment was due or, if there was no corresponding
date (e.g., as when a 30-day month follows a 31-day month in which the payment
was due on the 31st day of that month), then on the last day of that
immediately preceding month; and similarly for "60 days Delinquent" and "90
days Delinquent," etc.
"Depositor": Asset Backed Securities Corporation, a Delaware
corporation, 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(a)(5) 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 Institution": Any depository institution or
trust company, including the Trustee, that (a) is incorporated under the laws
of the United States of America or any State thereof, (b) is subject to
supervision and examination by federal or state banking authorities and (c)
has outstanding unsecured commercial paper or other short-term unsecured debt
obligations that are rated F-1 (if rated by Fitch), A-1+ by S&P and P-1 by
Moody's (or comparable ratings if Fitch and Moody's are not the Rating
Agencies).
"Depository Participant": A broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
11
"Determination Date": With respect to each Distribution
Date, the fifth Business Day preceding such Distribution Date.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by the Trust Fund other
than through an Independent Contractor; provided, however, that the Trustee
(or the Servicer on behalf of the Trustee) shall not be considered to Directly
Operate an REO Property solely because the Trustee (or the Servicer on behalf
of the Trustee) establishes rental terms, chooses tenants, enters into or
renews leases, deals with taxes and insurance, or makes decisions as to
repairs or capital expenditures with respect to such REO Property.
"Disqualified Organization": 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 Xxxxxxx Mac, a majority of its board of
directors is not selected by such governmental unit), (ii) any foreign
government, any international organization, or any agency or instrumentality
of any of the foregoing, (iii) any organization (other than certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from the
tax imposed by Chapter 1 of the Code (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, (v) an
"electing large partnership" within the meaning of Section 775 of the Code and
(vi) any other Person so designated by the Trustee based upon an Opinion of
Counsel that the holding of an Ownership Interest in a Residual Certificate by
such Person may cause any REMIC created hereunder, or any Person having an
Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a
Residual 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 Account": The trust account or accounts
created and maintained by the Trustee pursuant to Section 3.10(b) which shall
be entitled "Distribution Account, Xxxxx Fargo Bank Minnesota, N.A., as
Trustee, in trust for the registered holders of Asset Backed Securities
Corporation Home Equity Loan Trust 2002-HE2, Series 2002-HE2". The
Distribution Account must be an Eligible Account.
"Distribution Date": The 15th day of any month, or if such
15th day is not a Business Day, the Business Day immediately following such
15th day, commencing in June 2002.
"DLJMC": DLJ Mortgage Capital, Inc. a Delaware corporation,
or its successor in interest.
"DLJMC Mortgage Loans": The Mortgage Loans originated by
Cityscape Corp. and Equicon Corporation and purchased by DLJMC.
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"Double Adjusted Net WAC": As to any Distribution Date, will
be a per annum rate equal to (a) the Adjusted Net WAC less (b) the Current
Interest for the Class A-IO Certificate for such date multiplied by a
fraction, the numerator of which is twelve and the denominator is the
Aggregate Collateral Balance as of the first day of the related Due Period.
This rate will be adjusted to correspond with the day counting convention used
for the applicable Class of Certificates. For federal income tax purposes, a
per annum rate equal to the weighted average rate of the Class T2 Regular
Interests, where the Class T2-A Regular Interest has a rate equal to Adjusted
Net WAC, and the Class T2-SB Regular Interests have a rate equal to (i) from
the Closing Date to each respective Rate Change Date, Net WAC minus 6.50% and
(ii) thereafter, Net WAC.
"Due Date": With respect to each Distribution Date, the day
of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive
of any days of grace in the related Due Period.
"Due Period": With respect to any Distribution Date, the
period commencing on the second day of the month immediately preceding the
month in which such Distribution Date occurs and ending on the first day of
the month in which such Distribution Date occurs.
"Early Termination Date": As defined in the Yield
Maintenance Agreement.
"Early Termination Fund": The separate Eligible Account
created and initially maintained by the Trustee pursuant to Section 4.07 in
the name of the Trustee for the benefit of the Certificateholders and
designated "Xxxxx Fargo Bank Minnesota, N.A. in trust for registered holders
of Asset Backed Securities Corporation, Asset Backed Pass-Through
Certificates, Series 2002-HE2." The Early Termination Fund shall not be part
of any REMIC. Funds in the Early Termination Fund shall be held in trust for
the Class X Certificateholders for the uses and purposes set forth in this
Agreement.
"Eligible Account": Any of (i) an account or accounts
maintained with a Depository Institution, (ii) an account or accounts the
deposits in which are fully insured by the FDIC or (iii) a trust account or
accounts maintained with the corporate trust department of a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity. Eligible Accounts may bear interest.
"Equicon": Equicon Corporation.
"Equicon Mortgage Loans": The Mortgage Loans originated by
Equicon and listed on Schedule 1, Part D(2) hereto.
"ERISA": The Employee Retirement Income Security Act of
1974, as amended.
"Estate in Real Property": A fee simple estate in a parcel
of land.
"Excess Overcollateralized Amount": With respect to any
Distribution Date, the excess, if any, of (i) the Overcollateralized Amount
for such Distribution Date over (ii) the Required Overcollateralized Amount
for such Distribution Date.
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"Extraordinary Trust Fund Expense": Any amounts reimbursable
to the Trustee, or any director, officer, employee or agent of the Trustee,
from the Trust Fund pursuant to Section 2.02, 2.03 or 8.05(a) and any amounts
payable from the Distribution Account in respect of taxes pursuant to Section
10.01(g)(iii), any amounts payable from the Distribution Account in respect of
any REMIC Administration pursuant to Section 10.01(c).
"Fairbanks": Fairbanks Capital Corp., or any successor in
interest thereto.
"Xxxxxx Xxx": Xxxxxx Xxx, formally known as the Federal
National Mortgage Association, or any successor thereto.
"FDIC": Federal Deposit Insurance Corporation or any
successor thereto.
"Federal Funds Rate": The interest rate at which depository
institutions lend balances at the Federal Reserve to other depository
institutions overnight.
"Final Recovery Determination": With respect to any
defaulted Mortgage Loan or any REO Property (other than a Mortgage Loan or REO
Property purchased by the Seller, the Depositor or the Servicer pursuant to or
as contemplated by Section 2.03, Section 3.16(c) or Section 9.01), a
determination made by the Servicer that all Insurance Proceeds, Liquidation
Proceeds and other payments or recoveries which the Servicer, in its
reasonable good faith judgment, expects to be finally recoverable in respect
thereof have been so recovered. The Servicer shall maintain records, prepared
by a Servicing Officer, of each Final Recovery Determination made thereby.
"Fitch": Fitch, Inc., or its successor in interest thereto.
"Formula Rate": As to any Class of LIBOR Certificates and
any Distribution Date, the sum of One-Month LIBOR and the applicable
Certificate Margin.
"Xxxxxxx Mac": Xxxxxxx Mac, formally known as the Federal
Home Loan Mortgage Corporation, or any successor thereto.
"Gross Margin": With respect to each Adjustable Rate
Mortgage Loan, the fixed percentage set forth in the related Mortgage Note
that is added to the Index on each Adjustment Date in accordance with the
terms of the related Mortgage Note used to determine the Mortgage Rate for
such Mortgage Loan.
"Independent": When used with respect to any specified
Person, any such Person who (a) is in fact independent of the Depositor, the
Servicer and their respective Affiliates, (b) does not have any direct
financial interest in or any material indirect financial interest in the
Depositor, the Servicer or any Affiliate thereof, and (c) is not connected
with the Depositor, the Servicer or any Affiliate thereof as an officer,
employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, however, that a Person shall not fail
to be Independent of the Depositor, the Servicer or any Affiliate thereof
merely because such Person is the beneficial owner of 1% or less of any Class
of securities issued by the Depositor or the Servicer or any Affiliate
thereof, as the case may be.
14
"Independent Contractor": Either (i) any Person (other than
the Servicer) that would be an "independent contractor" with respect to the
Trust Fund within the meaning of Section 856(d)(3) of the Code if the Trust
Fund were a real estate investment trust (except that the ownership tests set
forth in that section shall be considered to be met by any Person that owns,
directly or indirectly, 35% or more of any Class of Certificates), so long as
the Trust Fund does not receive or derive any income from such Person and
provided that the relationship between such Person and the Trust Fund is at
arm's length, all within the meaning of Treasury Regulation Section
1.856-4(b)(5), or (ii) any other Person (including the Servicer) if the
Trustee has received an Opinion of Counsel to the effect that the taking of
any action in respect of any REO Property by such Person, subject to any
conditions therein specified, that is otherwise herein contemplated to be
taken by an Independent Contractor will not cause such REO Property to cease
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8)
of the Code (determined without regard to the exception applicable for
purposes of Section 860D(a) of the Code), or cause any income realized in
respect of such REO Property to fail to qualify as Rents from Real Property.
"Index": With respect to each Adjustable Rate Mortgage Loan
and each related Adjustment Date, the average of the interbank offered rates
for six-month United States dollar deposits in the London market as published
by the Western Edition of The Wall Street Journal and as most recently
available as of a date as specified in the related Mortgage Note.
"Initial Cut-off Date": May 1, 2002.
"Initial Mortgage Loan": A Mortgage Loan conveyed to the
Trust Fund on the Closing Date pursuant to this Agreement as identified on the
Mortgage Loan Schedule delivered to the Trustee on the Closing Date.
"Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are not to be applied to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the procedures that
the Servicer would follow in servicing Mortgage Loans held for its own
account, subject to the terms and conditions of the related Mortgage Note and
Mortgage.
"Interest Accrual Period": For any Distribution Date and (a)
the Class A-IO Certificates for a given Distribution Date will be the calendar
month preceding the month of such Distribution Date based on a 360-day year
consisting of twelve 30-day months, (b) the LIBOR Certificates for a given
Distribution Date will be the actual number of days (based on a 360-day year)
included in the period commencing on the immediately preceding Distribution
Date (or, in the case of the first such Interest Accrual Period, commencing on
the Closing Date) and ending on the day immediately preceding such
Distribution Date, and (c) the Class B-IO Certificates, the period commencing
on the prior Distribution Date of the month preceding the month in which the
Distribution Date occurs and ending on the day immediately preceeding the day
of the month in which such Distribution Date occurs (or, in the case of the
first such Interest Accrual Period, commencing on the Closing Date) based on a
360-day year consisting of twelve 30-day months. All distributions of interest
on the LIBOR Certificates will be based on a 360-day year and the actual
number of days in the applicable Interest Accrual Period.
15
"Interest Determination Date": With respect to the LIBOR
Certificates and any Interest Accrual Period therefor, the second London
Business Day preceding the commencement of such Interest Accrual Period.
"Interest Distribution Amount": With respect to any
Distribution Date and any Class of Offered Certificates and the Class B-IO
Certificates, the sum of the aggregate Accrued Certificate Interest on the
Certificates of such Class for such Distribution Date and the related Unpaid
Interest Shortfall Amount.
"Interest Remittance Amount": With respect to any
Distribution Date, that portion of the Available Distribution Amount for such
Distribution Date allocable to interest for such Distribution Date.
"Late Collections": With respect to any Mortgage Loan and
any Due Period, all amounts received subsequent to the Determination Date
immediately following such Due Period, whether as late payments of Monthly
Payments or as Insurance Proceeds, Liquidation Proceeds or otherwise, which
represent late payments or collections of principal and/or interest due
(without regard to any acceleration of payments under the related Mortgage and
Mortgage Note) but Delinquent for such Due Period and not previously
recovered.
"Letter Agreement": With respect to the Long Beach Mortgage
Loans, the Letter Agreement dated as of May 30, 2002 among Long Beach Mortgage
Company, Xxxxx Fargo Bank Minnesota, N.A. and DLJ Mortgage Capital, Inc. and
attached as Exhibit I hereto.
"LIBOR Certificates": As specified in the Preliminary
Statement.
"Liquidation Event": With respect to any Mortgage Loan, any
of the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such
Mortgage Loan is removed from the Trust Fund by reason of its being purchased,
sold or replaced pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 9.01. With respect to any REO Property, either of the
following events: (i) a Final Recovery Determination is made as to such REO
Property; or (ii) such REO Property is removed from the Trust Fund by reason
of its being purchased pursuant to Section 9.01.
"Liquidation Proceeds": The amount (other than Insurance
Proceeds or amounts received in respect of the rental of any REO Property
prior to REO Disposition) received by the Servicer in connection with (i) the
taking of all or a part of a Mortgaged Property by exercise of the power of
eminent domain or condemnation, (ii) the liquidation of a defaulted Mortgage
Loan through a trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property
pursuant to or as contemplated by Section 2.03, Section 3.16(c), Section 3.23
or Section 9.01.
"Loan-to-Value Ratio" or "LTV" : As of any date of
determination, the fraction, expressed as a percentage, the numerator of which
is the principal balance of the related Mortgage Loan at such date and the
denominator of which is the Value of the related Mortgaged Property.
16
"London Business Day": Any day on which banks in the City of
London and The City of New York are open and conducting transactions in United
States dollars.
"Long Beach": Long Beach Mortgage Company, or its successor
in interest.
"Long Beach Mortgage Loans": The Mortgage Loans originated
by Long Beach and listed on Schedule 1, Part E hereto.
"Maximum Mortgage Rate": With respect to each Adjustable
Rate Mortgage Loan, the percentage set forth in the related Mortgage Note as
the maximum Mortgage Rate thereunder.
"Minimum Mortgage Rate": With respect to each Adjustable
Rate Mortgage Loan, the greater of (a) the Gross Margin set forth in the
related Mortgage Note and (b) the percentage set forth in the related Mortgage
Note as the minimum Mortgage Rate thereunder.
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan
which is payable by the related Mortgagor from time to time under the related
Mortgage Note, determined: (a) after giving effect to (i) any Deficient
Valuation and/or Debt Service Reduction with respect to such Mortgage Loan and
(ii) any reduction in the amount of interest collectible from the related
Mortgagor pursuant to the Relief Act; (b) without giving effect to any
extension granted or agreed to by the Servicer pursuant to Section 3.07; and
(c) on the assumption that all other amounts, if any, due under such Mortgage
Loan are paid when due.
"Moody's": Xxxxx'x Investors Service, Inc. or its successor
in interest.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first lien on, or first priority security interest in, a Mortgaged
Property securing a Mortgage Note.
"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.
"Mortgage Loan": Each Mortgage Loan transferred and assigned
to the Trustee pursuant to Section 2.01 or Section 2.03(c) of this Agreement,
as held from time to time as a part of the Trust Fund, the Initial Mortage
Loans so held being identified in the Mortgage Loan Schedule, including each
REO Property unless the context otherwise requires. For the avoidance of doubt
a Mortgage Loan may be either an Initial Mortgage Loan or a Subsequent
Mortgage Loan.
"Mortgage Loan Purchase Agreement": Any one of the
agreements between an Originator and the Seller, regarding the sale of the
related Mortgage Loans by such Originator to the Seller.
"Mortgage Loan Schedule": As of any date, the list of
Mortgage Loans included in the Trust Fund on such date, attached hereto as
Schedule 1. The Mortgage Loan Schedule
17
shall set forth by Subgroup the following information with respect to each
Mortgage Loan in such Subgroup:
(i) the Mortgagor's name and the related
Originator's Mortgage Loan identifying number;
(ii) the street address of the Mortgaged Property
including the state and zip code;
(iii) a code indicating whether the Mortgaged
Property is owner-occupied;
(iv) the type of Residential Dwelling constituting
the Mortgaged Property;
(v) the original months to maturity;
(vi) the Loan-to-Value Ratio at origination;
(vii) the Mortgage Rate in effect immediately
following the Cut-off Date;
(viii) the date on which the first Monthly Payment
was due on the Mortgage Loan;
(ix) the stated maturity date;
(x) the amount of the Monthly Payment due on the
first Due Date after the Cut-off Date;
(xi) the last Due Date on which a Monthly Payment
was actually applied to the unpaid Stated Principal Balance;
(xii) the original principal amount of the Mortgage
Loan;
(xiii) the Stated Principal Balance of the Mortgage
Loan as of the close of business on the Cut-off Date;
(xiv) with respect to each Adjustable Rate Mortgage
Loan, the Gross Margin;
(xv) a code indicating the purpose of the Mortgage
Loan (i.e., purchase financing, rate/term refinancing, cash-out
refinancing);
(xvi) with respect to each Adjustable Rate Mortgage
Loan, the Maximum Mortgage Rate;
(xvii) with respect to each Adjustable Rate
Mortgage Loan, the Minimum Mortgage Rate;
18
(xviii) the Mortgage Rate at origination;
(xix) with respect to each Adjustable Rate Mortgage
Loan, the Periodic Rate Cap and the maximum first Adjustment Date
Mortgage Rate adjustment;
(xx) a code indicating the documentation program;
(xxi) with respect to each Adjustable Rate
Mortgage Loan, the first Adjustment Date immediately following the
Cut-off Date;
(xxii) the Value of the Mortgaged Property; and
(xxiii) the sale price of the Mortgaged Property,
if applicable.
The Mortgage Loan Schedule shall be comprised of four parts,
Part A, Part B and Part C relating to the Mortgage Loans originated by each
Originator and set forth the following information with respect to the
Mortgage Loans in the aggregate as of the Cut-off Date: (1) the number of
Mortgage Loans; (2) the current principal balance of the Mortgage Loans; (3)
the weighted average Mortgage Rate of the Mortgage Loans; and (4) the weighted
average maturity of the Mortgage Loans. The Mortgage Loan Schedule shall set
forth the aggregate Stated Principal Balance of the Mortgage Loans. The
Mortgage Loan Schedule shall be amended from time to time by the Depositor in
accordance with the provisions of this Agreement. With respect to any
Qualified Substitute Mortgage Loan, the Cut-off Date shall refer to the
related Cut-off Date for such Mortgage Loan, determined in accordance with the
definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other
evidence of the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on
Schedule 1 from time to time, and any REO Properties acquired in respect
thereof.
"Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time
in accordance with the provisions of the related Mortgage Note. With respect
to each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.
"Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of an Estate in Real
Property or a leasehold interest improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Monthly Excess Cashflow": With respect to any
Distribution Date, the sum of (i) any Overcollateralization Reduction Amount
for such Distribution Date and (ii) the excess of (x) the Available
Distribution Amount for such Distribution Date over (y) the sum for such
Distribution Date of (A) the aggregate Interest Distribution Amount payable to
the holders of the
19
Class A and Class A-IO Certificates, the Accrued Certificate Interest payable
to the holders of the Subordinated Offered Certificates and any Strip Amount,
each pursuant to Section 4.01(a)(1) and (B) the sum of the amounts described
in clauses (b)(i) through (iii) of the definition of Principal Distribution
Amount.
"Net Mortgage Rate": With respect to any Mortgage Loan (or
the related REO Property) as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Rate for such Mortgage Loan
minus the Servicing Fee Rate.
"Net WAC Carryover Amount": With respect to each Class of
LIBOR Certificates and a Distribution Date, an amount equal to the sum of (A)
the excess of (1) the amount of interest such Class of Certificates would
otherwise be entitled to receive on the Distribution Date had the related
Pass-Through Rate been calculated at the related Formula Rate for such
Distribution Date over (2) the amount of interest payable on such Class of
Certificates at Triple Adjusted Net WAC for such Distribution Date and (B) the
Net WAC Carryover Amount for such Class of Certificates for all previous
Distribution Dates not previously paid to such Certificateholders (including
any interest accrued on such amount during the most recently ended Interest
Accrual Period at the related Formula Rate).
"Net WAC Fund": The Eligible Account established pursuant to
Section 3.26.
"Net WAC Rate": The weighted average Net Mortgage Rate of
the Mortgage Loans adjusted for the appropriate day counting convention.
"New Lease": Any lease of REO Property entered into on
behalf of the Trust Fund, including any lease renewed or extended on behalf of
the Trust Fund, if the Trust Fund has the right to renegotiate the terms of
such lease.
"Nonrecoverable P&I Advance": Any P&I Advance previously
made or proposed to be made in respect of a Mortgage Loan or REO Property
that, in the good faith business judgment of the Servicer using Accepted
Servicing Practices, will not or, in the case of a proposed P&I Advance, would
not be ultimately recoverable from related late collections, Insurance
Proceeds or Liquidation Proceeds on such Mortgage Loan or REO Property as
provided herein.
"Nonrecoverable Servicing Advance": Any Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the Servicer using
Accepted Servicing Practices, will not or, in the case of a proposed Servicing
Advance, would not be ultimately recoverable from related Late Collections,
Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or REO
Property as provided herein.
"Non-United States Person": Any Person other than a United
States Person.
"Notional Amount": With respect to the Class A-IO
Certificates and any Distribution Date, will equal the Class A Notional Amount
for such Distribution Date. The "Notional Amount" for the Class B-IO
Certificates will equal (x) on or prior to the Distribution Date in May 2004,
the lesser of (i) $70,000,000 and (ii) the aggregate principal balance of the
20
Mortgage Loans as of the first day of the month of such Distribution Date
(prior to giving effect to Monthly Payments due on such date) and (y) on any
Distribution Date after the Distribution Date in May 2004, zero.
"Offered Certificates" : As defined in the Preliminary
Statement.
"Officers' Certificate": With respect to the Depositor and
the Seller, a certificate signed by the Chairman of the Board, the Vice
Chairman of the Board, the President, a vice president (however denominated)
or an authorized agent, and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Depositor or Seller, as
applicable. With respect to the Servicer, any officer who is authorized to act
for the Servicer in matters relating to this Agreement, and whose action is
binding upon the Servicer, initially including those individuals whose names
appear on the list of authorized officers delivered at the closing.
"One-Month LIBOR": With respect to the LIBOR Certificates
and any Interest Accrual Period therefor, the rate determined by the Trustee
on the related Interest Determination Date (or with respect to the initial
Interest Accrual Period, on the Closing Date based on information available on
the related Interest Determination Date) on the basis of the offered rate for
one-month U.S. dollar deposits, as such rate appears on Telerate Page 3750 as
of 11:00 a.m. (London time) on such Interest Determination Date; provided that
if such rate does not appear on Telerate Page 3750, the rate for such date
will be determined on the basis of the offered rates of the Reference Banks
for one-month U.S. dollar deposits, as of 11:00 a.m. (London time) on such
Interest Determination Date. In such event, the Trustee will request the
principal London office of each of the Reference Banks to provide a quotation
of its rate. If on such Interest Determination Date, two or more Reference
Banks provide such offered quotations, One-Month LIBOR for the related
Interest Accrual Period shall be the arithmetic mean of such offered
quotations (rounded upwards if necessary to the nearest whole multiple of
1/16%). If on such Interest Determination Date, fewer than two Reference Banks
provide such offered quotations, One-Month LIBOR for the related Interest
Accrual Period shall be the higher of (i) LIBOR as determined on the previous
Interest Determination Date and (ii) the Reserve Interest Rate.
Notwithstanding the foregoing, if, under the priorities described above, LIBOR
for an Interest Determination Date would be based on LIBOR for the previous
Interest Determination Date for the third consecutive Interest Determination
Date, the Trustee shall select an alternative comparable index (over which the
Trustee has no control), used for determining one-month Eurodollar lending
rates that is calculated and published (or otherwise made available) by an
independent party.
"Operative Documents": The Mortgage Loan Purchase
Agreements, the Reconstitution Agreements, the Assignment and Assumption
Agreement and any other documents related hereto or thereto.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor or the Servicer and
which shall be acceptable to the Trustee (which acceptance shall not be
unreasonably withheld), except that any opinion of counsel relating to (a) the
qualification of any REMIC created hereunder or (b) compliance with the REMIC
Provisions must be an opinion of Independent counsel.
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"Optional Termination Date": The first Distribution Date
that the Servicer shall be permitted to purchase the Mortgage Loans and REO
Properties pursuant to Section 9.01(b).
"Originators": Any of New Century Mortgage Corporation, or
its successor in interest, Long Beach Mortgage Company, or its successor in
interest, WMC Mortgage Corp., or its successor in interest, Cityscape Corp. or
Equicon Corporation.
"Overcollateralized Amount": As of any Distribution Date,
the excess, if any, of (a) the aggregate Stated Principal Balances of the
Mortgage Loans and REO Properties as of the last day of the related Due Period
plus the Pre-Funded Amount on such Distribution Date over (b) the sum of the
aggregate Certificate Principal Balances of the Certificates as of such
Distribution Date (after taking into account the payment of the amounts
described in clauses (b)(i) through (iv) of the definition of Principal
Distribution Amount on such Distribution Date).
"Overcollateralization Deficiency Amount": With respect to
any Distribution Date, the excess, if any, of (a) the Required
Overcollateralized Amount applicable to such Distribution Date over (b) the
Overcollateralized Amount applicable to such Distribution Date (after taking
into account the payment of the Principal Distribution Amount, exclusive of
the payment of any Overcollateralization Increase Amount on such Distribution
Date).
"Overcollateralization Increase Amount": With respect to any
Distribution Date, the lesser of (a) the Overcollateralization Deficiency
Amount as of such Distribution Date (after taking into account the payment of
the Principal Distribution Amount, exclusive of the payment of any
Overcollateralization Increase Amount on such Distribution Date) and (b) Net
Monthly Excess Cash Flow available for distribution on that Distribution Date
pursuant to Section 4.01(a)(3)(ii).
"Overcollateralization Reduction Amount": With respect to
any Distribution Date, an amount equal to the lesser of (a) the Excess
Overcollateralized Amount and (b) the sum of the amounts available for
distribution specified in clauses (b)(i) through (iii) of the definition of
Principal Distribution Amount.
"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": For any Distribution Date and any Class
of LIBOR Certificates, the lesser of (i) the related Formula Rate and (ii)
Triple Adjusted Net WAC for such Distribution Date. As to the Class A-IO
Certificates (a) for any Distribution Date on of prior to the Distribution
Date in November 2004, the lesser of (x) 6.50% per annum and (y) the Adjusted
Net WAC, and (b) any Distribution Date after the Distribution Date in November
2004, 0.00%. As to the Class B-IO Certificates (a) for any Distribution Date
on of prior to the Distribution Date in May 2004, the lesser of (x) 3.50% per
annum and (y) the Double Adjusted Net WAC, and (b) any Distribution Date after
the Distribution Date in May 2004, 0.00%.
"Percentage Interest": As to any Certificate, either the
percentage set forth on the face thereof or the percentage obtained by
dividing the initial Certificate Principal Balance or
22
initial Notional Amount represented by such Certificate by the aggregate
initial Certificate Principal Balance or aggregate initial Notional Amount of
all of the Certificates of such Class.
"Performance Standards": The standards set forth in Exhibit
J herein.
"Periodic Rate Cap": With respect to each Adjustable Rate
Mortgage Loan and any Adjustment Date therefor, the fixed percentage set forth
in the related Mortgage Note, which is the maximum amount by which the
Mortgage Rate for such Mortgage Loan may increase or decrease (without regard
to the Maximum Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment
Date from the Mortgage Rate in effect immediately prior to such Adjustment
Date.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than
par, regardless of whether issued by the Depositor, the Servicer, the Trustee
or any of their respective Affiliates:
(a) direct obligations of, or obligations fully
guaranteed as to timely payment of principal and
interest by, the United States or any agency or
instrumentality thereof, provided such obligations
are backed by the full faith and credit of the
United States;
(b) demand and time deposits in, certificates of
deposit of, or 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 and
issued by, any Depository Institution;
(c) repurchase obligations with respect to any security
described in clause (i) above entered into with a
Depository Institution (acting as principal);
(d) securities bearing interest or sold at a discount
that are issued by any corporation incorporated
under the laws of the United States of America or
any state thereof and that are rated by each Rating
Agency that rates such securities in its highest
long-term unsecured rating categories at the time
of such investment or contractual commitment
providing for such investment;
(e) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations
payable on demand or on a specified date not more
than 30 days after the date of acquisition thereof)
that is rated by each Rating Agency that rates such
securities in its highest short-term unsecured debt
rating available at the time of such investment;
(f) units of money market funds, including money market
funds managed or advised by the Trustee or an
Affiliate thereof, that have been rated "AAA" by
Fitch (if rated by Fitch), "Aaa" by Xxxxx'x and
"AAA" by S&P (if rated by S&P); and
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(g) if previously confirmed in writing to the Trustee,
any other demand, money market or time deposit, or
any other obligation, security or investment, as
may be acceptable to the Rating Agencies as a
permitted investment of funds backing securities
having ratings equivalent to its highest initial
rating of the Class A Certificates;
provided, however, that no instrument described hereunder shall evidence
either the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying
obligations.
"Permitted Transferee": Any Transferee of a Residual
Certificate other than a Disqualified Organization or Non-United States
Person.
"Person": Any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the Servicer in respect of any Distribution Date representing
the aggregate of all payments of principal and interest, net of the Servicing
Fee, that were due during the related Due Period on the Mortgage Loans and
that were Delinquent on the related Determination Date, plus certain amounts
representing assumed payments not covered by any current net income on the
Mortgaged Properties acquired by foreclosure or deed in lieu of foreclosure as
determined pursuant to Section 4.03. The Servicer will not be required to make
any Nonrecoverable P&I Advances as described in Section 4.03.
"Plan": Any employee benefit plan (as defined in Section
3(3) of ERISA) or other plan as defined in Section 4975(e)(1) of the Code,
including individual retirement accounts and annuities and, Xxxxx plans, that
is subject to Title I of ERISA or Section 4975 of the Code.
"Pool Principal Balance": As of any Distribution Date, the
aggregate Stated Principal Balance of the Mortgage Loans.
"Pre-Funded Amount": The amount on deposit in the
Pre-Funding Account, which shall equal $140,000,000 on the Closing Date.
"Pre-Funding Account": The separate Eligible Account created
and maintained by the Trustee pursuant to Section 3.10(e) in the name of the
Trustee for the benefit of the Certificateholders and designated "Xxxxx Fargo
Bank Minnesota, N.A., in trust for registered holders of in trust for the
registered holders of Asset Backed Securities Corporation Home Equity Loan
Trust 2002-HE2, Series 2002-HE2." Funds in the Pre-Funding Account shall be
held in trust for the Certificateholders for the uses and purposes set forth
in this Agreement and shall not be a part of any REMIC created hereunder;
provided, however, that any investment income earned from Permitted
Investments made with funds in the Pre-Funding Account shall be for the
account of the Depositor.
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"Pre-Funding Period": The period from the Closing Date until
the earlier of (i) the date on which the amount on deposit in the Pre-Funding
Account is reduced to zero, or (ii) an Event of Default occurs or (iii) July
15, 2002.
"Prepayment Assumption": A constant prepayment rate ("CPR")
of 26% per annum of the then unpaid Stated Principal Balance of the Mortgage
Loans. The Prepayment Assumption is used solely for determining the accrual of
original issue discount on the Certificates for federal income tax purposes. A
CPR (or Constant Prepayment Rate) represents an annualized constant assumed
rate of prepayment each month of a pool of Mortgage Loans relative to its
outstanding principal balance for the life of such pool.
"Prepayment Charge": With respect to any Mortgage Loan and
Prepayment Period, any prepayment premium, penalty or charge collected by the
Servicer from a Mortgagor in connection with any voluntary Principal
Prepayment and held from time to time as a part of the Trust Fund. The
Servicer shall calculate, in good faith using Accepted Servicing Practices,
the amount of any Prepayment Charge solely pursuant to the terms of the
related Mortgage Note.
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was during the related
Prepayment Period the subject of a Principal Prepayment in full or in part, an
amount equal to interest at the applicable Net Mortgage Rate on the amount of
such Principal Prepayment for the number of days commencing on the date on
which the prepayment is applied and ending on the last day of the related
Prepayment Period. The obligations of the Servicer in respect of any
Prepayment Interest Shortfall are set forth in Section 3.24.
"Prepayment Period": With respect to any Distribution Date,
the calendar month preceding the calendar month in which such Distribution
Date occurs.
"Prime Rate": The rate of interest equal to the prime rate
as reported in The Wall Street Journal.
"Principal Distribution Amount": With respect to any
Distribution Date, the lesser of:
(a) the excess of the Available Distribution Amount
over the amount payable on the Certificates pursuant
to Section 4.01(a)(1); and
(b) (i) the sum of the principal portion of each
Monthly Payment on the Mortgage Loans due during
the related Due Period, whether or not received on
or prior to the related Determination Date;
(ii) the Stated Principal Balance of any
Mortgage Loan that was purchased during the related
Prepayment Period pursuant to or as contemplated by
Section 2.03, Section 3.16(c) or Section 9.01 and
the amount of any shortfall deposited in the
Collection Account in connection with the
substitution of a Deleted Mortgage Loan pursuant to
Section 2.03 during the related Prepayment Period;
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(iii) the principal portion of all other
unscheduled collections (including, without
limitation, Principal Prepayments, Insurance
Proceeds, Liquidation Proceeds and REO Principal
Amortization) received during the related
Prepayment Period, net of any portion thereof that
represents a recovery of principal for which an
advance was made by the Servicer pursuant to
Section 4.03 in respect of a preceding Distribution
Date;
(iv) the principal portion of any Realized
Losses incurred on the Mortgage Loans during the
related Prepayment Period to the extent covered by
Net Monthly Excess Cashflow for such Distribution
Date; and
(v) the amount of any Overcollateralization
Increase Amount for such Distribution Date to the
extent covered by Net Monthly Excess Cashflow for
such Distribution Date;
minus:
(c) the amount of any Overcollateralization Reduction
Amount for such Distribution Date.
"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 (without regard to
any Prepayment Charge that may have been collected by the Servicer in
connection with such payment of principal) representing the full amount of
scheduled interest due on any Due Date in any month or months subsequent to
the month of prepayment.
"Principal Remittance Amount" : With respect to any
Distribution Date, the sum of: (i) all scheduled payments of principal
collected or advanced on the Mortgage Loans by the Servicer that were due
during the related Due Period, (ii) the principal portion of all partial and
full Principal Prepayments of the Mortgage Loans applied by the Servicer
during the related Prepayment Period, (iii) the principal portion of all
related Net Liquidation Proceeds and Insurance Proceeds received during the
related Prepayment Period, (iv) that portion of the Purchase Price
representing principal of any repurchased Mortgage Loan, deposited to the
Collection Account during the related Prepayment Period, (v) the principal
portion of any related Substitution Adjustments deposited in the Collection
Account during the related Prepayment Period, (vi) with respect to the July
2002 Distribution Date, any amounts remaining in the Pre-Funding Account
(other than investment earnings thereon) and (vii) on the Distribution Date on
which the Trust is to be terminated in accordance with this Agreement, that
portion of the Termination Price in respect of principal.
"PTCE": A Prohibited Transaction Class Exemption.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03,
Section 3.16(c) or Section 9.01, and as confirmed by an Officers' Certificate
from the Servicer to the Trustee, an amount equal to the sum of (i) 100% of
the Stated Principal Balance thereof as of the date of purchase (or such other
price as provided in Section 9.01), (ii) in the case of (x) a Mortgage Loan,
accrued interest on
26
such Stated Principal Balance at the applicable Mortgage Rate in effect from
time to time from the Due Date as to which interest was last covered by a
payment by the Mortgagor or an advance by the Servicer through the end of the
calendar month in which the purchase is to be effected and (y) an REO
Property, the sum of (1) accrued interest on such Stated Principal Balance at
the applicable Mortgage Rate in effect from time to time from the Due Date as
to which interest was last covered by a payment by the Mortgagor or an advance
by the Servicer through the end of the calendar month immediately preceding
the calendar month in which such REO Property was acquired, plus (2) REO
Imputed Interest for such REO Property for each calendar month commencing with
the calendar month in which such REO Property was acquired and ending with the
calendar month in which such purchase is to be effected, net of the total of
all net rental income, Insurance Proceeds, Liquidation Proceeds and P&I
Advances that as of the date of purchase had been distributed as or to cover
REO Imputed Interest pursuant to Section 4.01, (iii) any unreimbursed
Servicing Advances and P&I Advances and any unpaid Servicing Fees allocable to
such Mortgage Loan or REO Property and any P&I Advances previously reimbursed
to the Servicer pursuant to Section 3.11(a)(vi), (iv) any amounts previously
withdrawn from the Collection Account in respect of such Mortgage Loan or REO
Property pursuant to Section 3.11(a)(ix) and Section 3.16(b), and (v) in the
case of a Mortgage Loan required to be purchased pursuant to Section 2.03,
expenses reasonably incurred or to be incurred by the Servicer or the Trustee
in respect of the breach or defect giving rise to the purchase obligation.
"Qualified Plan Investor": A plan investor or group of plan
investors on whose behalf the decision to purchase Offered Certificates is
made by an independent fiduciary that is (i) qualified to analyze and
understand the terms and conditions of the Yield Maintenance Agreement and the
effect of the Yield Maintenance Agreement on the credit ratings of the Offered
Certificates, and (ii) a "qualified professional asset manager", as defined in
Part V(a) of PTCE 84-14, an "in-house asset manager" as defined in Part IV(a)
of PTCE 96-23, or a plan fiduciary with total Plan and non-Plan assets under
management of at least $100 million at the time of the acquisition of the
Offered Certificates.
"Qualified Substitute Mortgage Loan": A Mortgage Loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this
Agreement which must, on the date of such substitution, (i) have an
outstanding principal balance, after application of all scheduled payments of
principal and interest due during or prior to the month of substitution, not
in excess of and not more than 5% less than the Stated Principal Balance of
the Deleted Mortgage Loan as of the Due Date in the calendar month during
which the substitution occurs, (ii) have a Mortgage Rate not less than (and
not more than one percentage point in excess of) the Mortgage Rate of the
Deleted Mortgage Loan, (iii) with respect to each Adjustable Rate Mortgage
Loan have a Maximum Mortgage Rate not less than the Maximum Mortgage Rate on
the Deleted Mortgage Loan, (iv) with respect to each Adjustable Rate Mortgage
Loan have a Minimum Mortgage Rate not less than the Minimum Mortgage Rate of
the Deleted Mortgage Loan, (v) with respect to each Adjustable Rate Mortgage
Loan have a Gross Margin equal to or greater than the Gross Margin of the
Deleted Mortgage Loan, (vi) with respect to each Adjustable Rate Mortgage
Loan, adjust in accordance with the Index and have a next Adjustment Date not
more than two months later than the next Adjustment Date on the Deleted
Mortgage Loan, and have the same intervals between Adjustment Dates as the
Deleted Mortgage Loan, (vii) have a remaining term to maturity not greater
than (and not more than one year less than) that of the Deleted Mortgage Loan,
(viii) have the same Due Date as the Due Date on the Deleted Mortgage Loan,
(ix) have a
27
Loan-to-Value Ratio as of the date of substitution equal to or
lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan as of such
date, (x) have a risk grading determined by the Servicer at least equal to the
risk grading assigned on the Deleted Mortgage Loan, (xi) have been
underwritten or reunderwritten by the Originator in accordance with the same
underwriting criteria and guidelines as the Mortgage Loans being replaced;
(xii) be of the same or better credit quality as the Mortgage Loan being
replaced and (xiii) conform to each representation and warranty in the
applicable Mortgage Loan Purchase Agreement. In the event that one or more
Mortgage Loans are substituted for one or more Deleted Mortgage Loans, the
amounts described in clause (i) hereof shall be determined on the basis of
aggregate principal balances, the Mortgage Rates described in clause (ii)
hereof shall be determined on the basis of weighted average Mortgage Rates,
the terms described in clause (vii) hereof shall be determined on the basis of
weighted average remaining term to maturity, the Loan-to-Value Ratios
described in clause (ix) hereof shall be satisfied as to each such Mortgage
Loan, the risk gradings described in clause (x) hereof shall be satisfied as
to each such Mortgage Loan and, except to the extent otherwise provided in
this sentence, the representations and warranties described in clause (xiii)
hereof must be satisfied as to each Qualified Substitute Mortgage Loan or in
the aggregate, as the case may be.
"Rating Agency or Rating Agencies": S&P, Xxxxx'x and Fitch
or their successors. If such agencies or their successors are no longer in
existence, "Rating Agencies" shall be such nationally recognized statistical
rating agencies, or other comparable Persons, designated by the Depositor,
notice of which designation shall be given to the Trustee and the Servicer.
"Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has been made, an amount (not less than
zero) equal to (i) the unpaid principal balance of such Mortgage Loan as of
the commencement of the calendar month in which the Final Recovery
Determination was made, plus (ii) accrued interest from the Due Date as to
which interest was last paid by the Mortgagor through the end of the calendar
month in which such Final Recovery Determination was made, calculated in the
case of each calendar month during such period (A) at an annual rate equal to
the annual rate at which interest was then accruing on such Mortgage Loan and
(B) on a principal amount equal to the Stated Principal Balance of such
Mortgage Loan as of the close of business on the Distribution Date during such
calendar month, plus (iii) any amounts previously withdrawn from the
Collection Account in respect of such Mortgage Loan pursuant to Section
3.11(a)(ix) and Section 3.16(b), minus (iv) the proceeds, if any, received in
respect of such Mortgage Loan during the calendar month in which such Final
Recovery Determination was made, net of amounts that are payable therefrom to
the Servicer with respect to such Mortgage Loan pursuant to Section
3.11(a)(iii).
With respect to any REO Property as to which a Final
Recovery Determination has been made, an amount (not less than zero) equal to
(i) the unpaid principal balance of the related Mortgage Loan as of the date
of acquisition of such REO Property on behalf of the Trust Fund, plus (ii)
accrued interest from the Due Date as to which interest was last paid by the
Mortgagor in respect of the related Mortgage Loan through the end of the
calendar month immediately preceding the calendar month in which such REO
Property was acquired, calculated in the case of each calendar month during
such period (A) at an annual rate equal to the annual rate at which interest
was then accruing on the related Mortgage Loan and (B) on a principal
28
amount equal to the Stated Principal Balance of the related Mortgage Loan as
of the close of business on the Distribution Date during such calendar month,
plus (iii) REO Imputed Interest for such REO Property for each calendar month
commencing with the calendar month in which such REO Property was acquired and
ending with the calendar month in which such Final Recovery Determination was
made, plus (iv) any amounts previously withdrawn from the Collection Account
in respect of the related Mortgage Loan pursuant to Section 3.11(a)(ix) and
Section 3.16(b), minus (v) the aggregate of all P&I Advances made by the
Servicer in respect of such REO Property or the related Mortgage Loan for
which the Servicer has been or, in connection with such Final Recovery
Determination, will be reimbursed pursuant to Section 3.23 out of rental
income, Insurance Proceeds and Liquidation Proceeds received in respect of
such REO Property, minus (vi) the total of all net rental income, Insurance
Proceeds and Liquidation Proceeds received in respect of such REO Property
that has been, or in connection with such Final Recovery Determination, will
be transferred to the Distribution Account pursuant to Section 3.23.
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.
With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Monthly
Payment.
"Realized Loss Percentage": For purposes of the Servicer
Termination Test, the percentage produced by the following calculation: (i)
the aggregate amount of cumulative Realized Losses incurred on the Mortgage
Loans since the Cut-off Date through the last day of the related Due Period,
minus (ii) any amount received with respect to Realized Losses on the Mortgage
Loans subsequent to a Final Recovery Determination being made with respect to
the Mortgage Loans, divided by (iii) the aggregate Cut-off Date Principal
Balance of the Mortgage Loans.
"Reconstitution Agreement" : Those certain reconstitution
agreements dated as of the Closing Date by and among the Seller, the Depositor
and each Originator (except Long Beach Mortgage Company, Cityscape and
Equicon) related to the applicable Mortgage Loan Purchase Agreement by and
between the Seller and the applicable Originator.
"Record Date": With respect to any Distribution Date and any
Definitive Certificates, other than the Class X Certificates and the first
Distribution Date, the close of business on the last Business Day of the month
immediately preceding the month in which such applicable Distribution Date
occurs. With respect to any Distribution Date and the Offered Certificates
(other than any Definitive Certificates) the Business Day prior to such
Distribution Date. Notwithstanding the foregoing, the holder of record for the
first Distribution Date and the Class X Certificates is Credit Suisse First
Boston Corporation.
29
"Reference Banks": Bankers Trust Company, Barclays Bank PLC,
The Tokyo Mitsubishi Bank and National Westminster Bank PLC and their
successors in interest; provided, however, that if any of the foregoing banks
are not able to serve as a Reference Bank, then any leading banks selected by
the Trustee which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) not controlling, under the control of or under common control
with the Depositor or any Affiliate thereof and (iii) which have been
designated as such by the Trustee.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were not used to purchase the related Mortgaged Property.
"Regular Certificate": As specified in the Preliminary
Statement.
"Regular Interest": A "regular interest" in a REMIC within
the meaning of Section 860G(a)(1) of the Code.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of
interest collectible on such Mortgage Loan for the most recently ended
calendar month as a result of the application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered
hereunder, with respect to which a REMIC election is to be made, consisting
of: (i) such Mortgage Loans as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together
with all collections thereon and proceeds thereof, (ii) any REO Property,
together with all collections thereon and proceeds thereof, (iii) the
Trustee's rights with respect to the Mortgage Loans under all insurance
policies required to be maintained pursuant to this Agreement and any proceeds
thereof, (iv) the Depositor's rights under each Mortgage Loan Purchase
Agreement and each Reconstitution Agreement (including any security interest
created thereby) and (v) the Collection Account (other than any amounts
representing any Servicer Prepayment Charge Payment Amount), the Distribution
Account (other than any amounts representing any Servicer Prepayment Charge
Payment Amount) and any REO Account and such assets that are deposited therein
from time to time and any investments thereof, together with any and all
income, proceeds and payments with respect thereto. Notwithstanding the
foregoing, however, REMIC I specifically excludes all payments and other
collections of principal and interest due on the Mortgage Loans on or before
the Cut-off Date and all Prepayment Charges payable in connection with
Principal Prepayments made on or before the Cut-off Date, the Net WAC Fund,
the Yield Maintenance Agreement and the Pre-Funding Account.
"REMIC II": The segregated pool of assets consisting of all
of the REMIC I Regular Interests conveyed in trust to the Trustee for the
benefit of REMIC III, as holder of the REMIC II Regular Interests, and the
Class R-II Certificateholders pursuant to Section 2.07, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.
30
"REMIC II Regular Interest": Any of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder
and designated as a "regular interest" in REMIC II.
"REMIC III": The segregated pool of assets consisting of all
of the REMIC II Regular Interests conveyed in trust to the Trustee for the
benefit of REMIC IV, as holder of the REMIC IV Regular Interests, and the
Class R-III residual interest pursuant to Section 2.07, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.
"REMIC III. Regular Interest": Any of the separate
non-certificated beneficial ownership interests in REMIC IV issued hereunder
and designated as a "regular interest" in REMIC IV
"REMIC IV": The segregated pool of assets consisting of all
of the REMIC III Regular Interests conveyed in trust to the Trustee for the
benefit of REMIC V, as holder of the REMIC N Regular Interests, and the Class
R-IV residual interest pursuant to Section 2.07, and all amounts deposited
therein, with respect to which a separate REMIC election is to be made.
"REMIC IV Regular Interest": Any of the separate
non-certificated beneficial ownership interests in REMIC IV issued hereunder
and designated as a "regular interest" in REMIC IV
"REMIC V": The segregated pool of assets consisting of all
of the REMIC IV Regular Interests conveyed in trust to the Trustee for the
benefit of the Certificateholders pursuant to Section 2.09, the Class R-V
residual interest and all amounts deposited therein, with respect to which a
separate REMIC election is to be made.
"REMIC IV Accretion Directed Class": As set forth in the
Section 1.03 under the heading entitled "REMIC IV."
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G 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 in form mutually agreed to
between the Trustee and the Servicer on a magnetic disk or tape or in
electronic format prepared by the Servicer pursuant to Section 4.03 with such
additions, deletions and modifications as agreed to by the Trustee and the
Servicer.
"Rents from Real Property": With respect to any REO
Property, gross income of the character described in Section 856(d) of the
Code as being included in the term "rents from real property."
"REO Account": Each of the accounts maintained, or caused to
be maintained, by the Servicer in respect of an REO Property pursuant to
Section 3.23.
31
"REO Disposition": The sale or other disposition of an REO
Property on behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of the
Trust Fund, one month's interest at the applicable Mortgage Rate on the Stated
Principal Balance of such REO Property (or, in the case of the first such
calendar month, of the related Mortgage Loan, if appropriate) as of the close
of business on the Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar
month, whether in the form of rental income, sale proceeds (including, without
limitation, that portion of the Termination Price paid in connection with a
purchase of all of the Mortgage Loans and REO Properties pursuant to Section
9.01 that is allocable to such REO Property) or otherwise, net of any portion
of such amounts (i) payable pursuant to Section 3.23(c) in respect of the
proper operation, management and maintenance of such REO Property or (ii)
payable or reimbursable to the Servicer pursuant to Section 3.23(d) for unpaid
Servicing Fees in respect of the related Mortgage Loan and unreimbursed
Servicing Advances and P&I Advances in respect of such REO Property or the
related Mortgage Loan, over (b) the REO Imputed Interest in respect of such
REO Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the
Servicer on behalf of the Trust Fund through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.23.
"Request for Release": A release signed by a Servicing
Officer, or in a mutually agreeable electronic format which will, in lieu of a
signature on its face, originate from a Servicing Officer, in the form of
Exhibit E-1 or Exhibit E-2 attached hereto.
"Required Net WAC Fund Deposit": With respect to any
Distribution Date on which the excess of Triple Adjusted Net WAC over the
weighted average Pass-Through Rates of the LIBOR Certificates is less than
0.25%, the excess, if any, of (i) the product of 0.50% and the aggregate
Stated Principal Balance of the Mortgage Loans over (ii) the amount of funds
on deposit in the Net WAC Fund prior to deposits thereto on such Distribution
Date. With respect to any Distribution Date on which the related excess of
Triple Adjusted Net WAC over the weighted average Pass-Through Rates of the
LIBOR Certificates is equal to or greater than 0.25%, the excess, if any, of
(i) $5,000 over (ii) the amount of funds on deposit in the Net WAC Fund prior
to deposits thereto on such Distribution Date. The Depositor shall cause the
deposit of $5,000 to the Net WAC Fund on the Closing Date.
"Required Overcollateralized Amount": With respect to the
first Distribution Date, $0.00 and any other Distribution Date (i) prior to
the Stepdown Date, $15,004,019 (ii) on or after the Stepdown Date provided a
Trigger Event is not in effect, the greater of (x) 3.50% of the Aggregate
Collateral Balance as of the last day of the related Due Period and (y)
$4,286,862 and (iii) on or after the Stepdown Date if a Trigger Event is in
effect, the Required Overcollateralized Amount for the immediately preceding
Distribution Date.
32
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be
either (i) the arithmetic mean (rounded upwards if necessary to the nearest
whole multiple of 1/16%) of the one-month U.S. dollar lending rates which New
York City banks selected by the Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Trustee can determine no
such arithmetic mean, the lowest one-month U.S. dollar lending rate which New
York City banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.
"Residential Dwelling": Any one of the following: (i) an
attached or detached one-family dwelling, (ii) a detached two- to four-family
dwelling, (iii) a one-family dwelling unit in a condominium project, (iv) an
attached or detached multifamily dwelling or (v) a detached one-family
dwelling in a planned unit development, none of which is a co-operative,
mobile or manufactured home (unless such mobile or manufactured home is
treated as real property under applicable state law).
"Residual Certificates": As specified in the Preliminary
Statement.
"Residual Interest": The sole class of "residual interests"
in a REMIC within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the
Trustee, the President, any vice president, any assistant vice president, the
Secretary, any assistant secretary, the Treasurer, any assistant treasurer,
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, with respect to a particular matter, to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"S&P": Standard and Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc., or its successor in interest.
"Seller": DLJ Mortgage Capital, Inc., or its successor in
interest, in its capacity as seller.
"Servicer": Fairbanks Capital Corp., or any successor
servicer appointed as herein provided, in its capacity as servicer hereunder.
"Servicer Evaluation Trigger Date": Any date on which
subsection (b) of the Servicer Termination Test occurs.
"Servicer Event of Default": One or more of the events
described in Section 7.01(a).
"Servicer Performance Evaluation": The performance
evaluation set forth in Section 3.27 herein.
33
"Servicer Prepayment Charge Payment Amount": The amounts
payable by the Servicer in respect of any waived Prepayment Charges pursuant
to Section 2.03(b)(ii).
"Servicer Remittance Date": With respect to any Distribution
Date, 1:00 p.m. New York time on the second Business Day preceding such
Distribution Date.
"Servicer Termination Test": With respect to any
Distribution Date, the Servicer will fail the Servicer Termination Test if (a)
the Servicer fails the Servicer Performance Evaluation as set forth in Section
3.27 herein and (b) the Realized Loss Percentage for the Mortgage Loans
exceeds the applicable percentages set forth below with respect to such
Distribution Date:
Distribution Date Occurring In Percentage
June 2002 through May 2004 2.50%
June 2004 through May 2005 3.00%
June 2005 through May 2006 3.50%
June 2006 and thereafter 4.50%
"Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09.
"Servicing Advances": The reasonable "out-of-pocket" costs
and expenses incurred by the Servicer in the performance of its servicing
obligations (including the reasonable fees of counsel) in connection with a
default, delinquency or other unanticipated event, including, but not limited
to, the cost of (i) the inspection, preservation, restoration and protection
of a Mortgaged Property, (ii) any enforcement or judicial proceedings,
including foreclosures, in respect of a particular Mortgage Loan, (iii) the
management (including reasonable fees in connection therewith) and liquidation
of any REO Property and (iv) the performance of its obligations under Section
3.01, Section 3.09, Section 3.14, Section 3.16 and Section 3.23. The Servicer
shall not be required to make any Nonrecoverable Servicing Advances.
"Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to one month's interest (or in the event
of any payment of interest which accompanies a Principal Prepayment in full
made by the Mortgagor during such calendar month, interest for the number of
days covered by such payment of interest) at the Servicing Fee Rate on the
same principal amount on which interest on such Mortgage Loan accrues for such
calendar month. A portion of such Servicing Fee may be retained by any
Sub-Servicer as its servicing compensation.
"Servicing Fee Rate": 0.50% per annum.
"Servicing File": With respect to each Mortgage Loan, the
Servicing File for such Mortgage Loan shall consist of copies of each item
required to be in the Mortgage File (for the avoidance of doubt, the original
of each such document shall be maintained in the Mortgage File for such
Mortgage Loan unless otherwise permitted to be released in accordance with
this Agreement) and the following documents:
34
(i) Residential loan application.
(ii) Mortgage Loan closing statement.
(iii) Verification of employment and income, if applicable.
(iv) Verification of acceptable evidence of source and
amount of downpayment.
(v) Credit report on Mortgagor.
(vi) Residential appraisal report.
(vii) Photograph of the Mortgaged Property.
(viii) Survey of the Mortgaged Property.
(ix) Copy of each instrument necessary to complete
identification of any exception set forth in the exception schedule
in the title policy, i.e., map or plat, restrictions, easements,
sewer agreements, home association declarations, etc.
(x) All required disclosure statements.
(xi) If required in an appraisal, termite report,
structural engineer's report, water potability and septic
certification.
(xii) Sales Contract, if applicable.
"Servicing Officer": Any employee of the Servicer involved
in, or responsible for, the administration and servicing of the Mortgage
Loans, whose name and specimen signature appear on a list of Servicing
Officers furnished by the Servicer to the Trustee and the Depositor on the
Closing Date, as such list may from time to time be amended.
"Single Certificate": With respect to any Class of
Certificates (other than the Class P Certificates and the Residual
Certificates), a hypothetical Certificate of such Class evidencing a
Percentage Interest for such Class corresponding to an initial Certificate
Principal Balance or Notional Amount of $1,000. With respect to the Class P
Certificates and the Residual Certificates, a hypothetical Certificate of such
Class evidencing a 20% Percentage Interest in such Class.
"Startup Day": With respect to each of REMIC I, REMIC II and
REMIC III, the day designated as such pursuant to Section 10.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage
Loan: (a) as of any date of determination up to but not including the
Distribution Date on which the proceeds, if any, of a Liquidation Event with
respect to such Mortgage Loan would be distributed, the principal balance of
such Mortgage Loan as of the Cut-off Date, as shown in the Mortgage Loan
Schedule,
35
minus the sum of (i) the principal portion of each Monthly Payment
due on a Due Date subsequent to the Cut-off Date, to the extent received from
the Mortgagor or advanced by the Servicer and distributed pursuant to Section
4.01 on or before such date of determination, (ii) all Principal Prepayments
received after the Cut-off Date, to the extent distributed pursuant to Section
4.01 on or before such date of determination, (iii) all Liquidation Proceeds
and Insurance Proceeds applied by the Servicer as recoveries of principal in
accordance with the provisions of Section 3.16, to the extent distributed
pursuant to Section 4.01 on or before such date of determination and (iv) any
Realized Loss incurred with respect thereto as a result of a Deficient
Valuation made during or prior to the Prepayment Period for the most recent
Distribution Date coinciding with or preceding such date of determination; and
(b) as of any date of determination coinciding with or subsequent to the
Distribution Date on which the proceeds, if any, of a Liquidation Event with
respect to such Mortgage Loan would be distributed, zero. With respect to any
REO Property: (a) as of any date of determination up to but not including the
Distribution Date on which the proceeds, if any, of a Liquidation Event with
respect to such REO Property would be distributed, an amount (not less than
zero) equal to the Stated Principal Balance of the related Mortgage Loan as of
the date on which such REO Property was acquired on behalf of the Trust Fund,
minus the sum of (i) if such REO Property was acquired before the Distribution
Date in any calendar month, the principal portion of the Monthly Payment due
on the Due Date in the calendar month of acquisition, to the extent advanced
by the Servicer and distributed pursuant to Section 4.01 on or before such
date of determination, and (ii) the aggregate amount of REO Principal
Amortization in respect of such REO Property for all previously ended calendar
months, to the extent distributed pursuant to Section 4.01 on or before such
date of determination; and (b) as of any date of determination coinciding with
or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed,
zero.
"Stepdown Date": The earlier to occur of (1) the
Distribution Date on which the aggregate Certificate Principal Balance of the
Class A Certificates has been reduced to zero and (2) the later to occur of
(x) the Distribution Date occurring in June 2005 and (y) the first
Distribution Date on which the Credit Enhancement Percentage is greater than
36.50%.
"Strip Amount": With respect to any Distribution Date on or
prior to the Distribution Date in November 2004, the product of 0.2175% per
annum and the Scheduled Notional Amount indicated on Schedule II to the Yield
Maintenance Agreement for that Distribution Date, and after the Distribution
Date in November 2004, zero.
"Strip Amount Rate": With respect to any Distribution Date
on or prior to the Distribution Date in November 2004, the Strip Amount for
that Distribution Date multiplied by a fraction, the numerator of which is
twelve and the denominator of which is the aggregate outstanding Principal
Balance of the Mortgage Loans as of the first day of the related Due Period.
Notwithstanding anything to the contrary herein, the Strip Amount Rate shall
be adjusted to be an effective rate reflecting accrued interest calculated on
the basis of a 360-day year and the actual number of days elapsed.
"Subgroup": Either Subgroup 1 or Subgroup 2, as applicable.
36
"Subgroup 1": Those certain Mortgage Loans identified as
belonging to Subgroup 1 on the Mortgage Loan Schedule.
"Subgroup 2": Those certain Mortgage Loans identified as
belonging to Subgroup 2 on the Mortgage Loan Schedule.
"Subordinated Offered Certificates": As specified in the
Preliminary Statement.
"Subsequent Mortgage Loan": Any Mortgage Loan other than an
Initial Mortgage Loan conveyed to the Trust Fund pursuant to Section 2.01
hereof and to a Subsequent Transfer Agreement, which Mortgage Loan shall be
listed on the revised Mortgage Loan Schedule delivered pursuant to this
Agreement and on Schedule A to such Subsequent Transfer Agreement. When used
with respect to a single Subsequent Transfer Date, Subsequent Mortgage Loan
shall mean a Subsequent Mortgage Loan conveyed to the Trust on that Subsequent
Transfer Date.
"Subsequent Transfer Agreement": A Subsequent Transfer
Agreement substantially in the form of Exhibit H hereto, executed and
delivered by the Depositor, the Servicer and the Trustee as provided in
Section 2.01 hereof.
"Subsequent Transfer Date": For any Subsequent Transfer
Agreement, the date the related Subsequent Mortgage Loans are transferred to
the Trust pursuant to the related Subsequent Transfer Agreement and this
Agreement.
"Sub-Servicer": Any Person with which the Servicer has
entered into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.
"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 Servicer.
"Sub-Servicing Agreement": The written contract between the
Servicer and a Sub-Servicer relating to servicing and administration of
certain Mortgage Loans as provided in Section 3.02.
"Substitution Shortfall Amount": As defined in Section
2.03(c).
"Tax Returns": Each federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income
Tax Return, including Schedule Q thereto, Quarterly Notice to Residual
Interest Holders of REMIC Taxable Income or Net Loss Allocation, or any
successor forms, to be filed on behalf of the Trust Fund due to its
classification as multiple REMICs 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.
37
"Telerate Page 3750": The display designated as page "3750"
on the Dow Xxxxx Telerate Capital Markets Report (or such other page as may
replace page 3750 on that report for the purpose of displaying London
interbank offered rates of major banks).
"Termination Payment": As defined in the Yield Maintenance
Agreement.
"Termination Price": As defined in Section 9.01.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
"Trigger Event": A Trigger Event has occurred with respect
to any Distribution Date if (i) the Delinquency Percentage exceeds 40% of the
Credit Enhancement Percentage or (ii) the cumulative Realized Losses as a
percentage of the aggregate principal balance of the Mortgage Loans as of the
last day of the previous calendar month is greater than the percentage set
forth in the following table:
------------------------------------ ------------------------
Range of Distribution Dates Percentage
------------------------------------ ------------------------
June 2005 - May 2006 3.00%
------------------------------------ ------------------------
June 2006 - May 2007 4.75%
------------------------------------ ------------------------
June 2007 - May 2008 6.00%
------------------------------------ ------------------------
June 2008 - May 2009 6.50%
------------------------------------ ------------------------
June 2009 and thereafter 6.75%
------------------------------------ ------------------------
The percentages set forth in the table above are the percentages applicable
for the first Distribution Date in the corresponding range of Distribution
Dates. The percentage for each succeeding Distribution Date in a range
increases incrementally by 1/12 of the positive difference between the
percentage applicable to the first Distribution Date in that range and the
percentage applicable to the first Distribution Date in the succeeding range.
"Triple Adjusted Net WAC": As to any Distribution Date, will
be a per annum rate equal to (a) the Double Adjusted Net WAC less (b) the
Current Interest for the Class B-IO Certificate for such date multiplied by a
fraction, the numerator of which is twelve and the denominator is the
Aggregate Collateral Balance as of the first day of the related Due Period.
This rate will be adjusted to correspond with the day counting convention used
for the applicable
38
Class of Certificates. For federal income tax purposes, a per annum rate equal
to the weighted average of the Class T3-A Regular Interest and the Class T3-B
Regular Interest where the Class T3-A Regular Interest has a rate equal to
Double Net WAC, and the Class T3-B has a rate equal to (i) from the Closing
Date to May 15, 2004, Double Net WAC minus 3.50% (but in no case less than
0%), and (ii) thereafter, Net WAC.
"Trust": Asset Backed Securities Corporation Home Equity
Loan Trust 2002-HE2, Series 2002-HE2, the trust created under this Agreement.
"Trust Fund": The corpus of the trust created hereunder
consisting of (i) the Mortgage Loans and all interest and principal received
on or with respect thereto after the related Cut-off Date, other than such
amounts which were due on the Mortgage Loans on or before the related Cut-off
Date; (ii) the Collection Account, the Distribution Account, the Pre-Funding
Account and the Net WAC Fund and all amounts deposited therein pursuant to the
applicable provisions of this Agreement (including, without limitation,
amounts received from the Seller on the Closing Date which shall be deposited
by the Trustee in the Collection Account pursuant to Section 2.01); (iii) the
Depositor's rights under each Mortgage Loan Purchase Agreement, the Assignment
and Assumption Agreement and each Reconstitution Agreement, (iv) the Trust's
rights under the Yield Maintenance Agreement; (v) property that secured a
Mortgage Loan and has been acquired by foreclosure, deed-in-lieu of
foreclosure or otherwise; and (vi) all proceeds of the conversion, voluntary
or involuntary, of any of the foregoing.
"Trustee": Xxxxx Fargo Bank Minnesota, N.A., a national
banking association, not in its individual capacity, but solely in its
capacity as Trustee for the benefit of the Certificateholders under this
Agreement, or its successor in interest, or any successor trustee appointed as
herein provided.
"Underwriters": Credit Suisse First Boston Corporation, X.X.
Xxxxxx Securities Inc. and Countrywide Securities Corporation.
"Uninsured Cause": Any cause of damage to a Mortgaged
Property such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies required to be maintained
pursuant to Section 3.14.
"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 State thereof or the District of
Columbia (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 if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust. To the extent prescribed in regulations by
the Secretary of the Treasury, which have not yet been issued, a trust which
was in existence on September 20, 1996 (other than a trust treated as owned by
the grantor under subpart E of part I of subchapter J of chapter 1 of the
Code), and which was treated as a United States person on September 20, 1996
may elect to continue to be treated as a United States person notwithstanding
the previous sentence. The term "United States" shall have the meaning set
forth in Section 7701 of the Code.
39
"Unpaid Interest Shortfall Amount": With respect to any
Distribution Date and any Class of Offered Certificates, the sum of (i) the
amount, if any, by which (a) the Accrued Certificate Interest for such Class
of Certificates as of the immediately preceding Distribution Date exceeded (b)
the actual amount distributed on such Class of Certificates in respect of
interest on such immediately preceding Distribution Date and (ii) the amount
of any Unpaid Interest Shortfall Amount for such Class of Certificates
remaining unpaid from the previous Distribution Date, plus accrued interest on
such sum calculated at the related Pass-Through Rate for the most recently
ended Interest Accrual Period such amount remained outstanding.
"Unpaid Realized Loss Amount": With respect to any Class of
Subordinated Offered Certificates and as to any Distribution Date, the excess
of (i) Applied Realized Loss Amounts with respect to that Class over (ii) the
sum of all distributions in reduction of Applied Realized Loss Amounts on all
previous Distribution Dates. Any amounts distributed to a Class of
Subordinated Offered Certificates in respect of any Unpaid Realized Loss
Amount will not be applied to reduce the Certificate Principal Balance of that
Class.
"Value": With respect to any Mortgaged Property related to a
Mortgage Loan, the lesser of (i) the lesser of (a) the value thereof as
determined by an appraisal made for the Originator of the Mortgage Loan at the
time of origination of the Mortgage Loan by an appraiser who met the minimum
requirements of Xxxxxx Mae and Xxxxxxx Mac and (b) the value thereof as
determined by a review appraisal conducted by the Originator in the event any
such review appraisal determines an appraised value more than ten percent
lower than the value thereof as determined by the appraisal referred to in
clause (i)(a) above in the case of a Mortgage Loan with an LTV less than or
equal to 80%, or more than five percent lower than the value thereof as
determined by the appraisal referred to in clause (i)(a) above, in the case of
a Mortgage Loan with an LTV greater than 80%, as determined by an appraisal
referred to in clause (i)(a), and (ii) the purchase price paid for the related
Mortgaged Property by the Mortgagor with the proceeds of the Mortgage Loan,
provided, however, (A) in the case of a Refinanced Mortgage Loan, such value
of the Mortgaged Property is based solely upon the lesser of (1) the value
determined by an appraisal made for the originator of such Refinanced Mortgage
Loan at the time of origination of such Refinanced Mortgage Loan by an
appraiser who met the minimum requirements of Xxxxxx Mae and Xxxxxxx Mac and
(2) the value thereof as determined by a review appraisal conducted by the
Originator in the event any such review appraisal determines an appraised
value more than ten percent lower than the value thereof as determined by the
appraisal referred to in clause (ii)(A)(1) above, in the case of a Mortgage
Loan with an LTV less than or equal to 80%, or more than five percent lower
than the value thereof as determined by the appraisal referred to in clause
(ii)(a)(1) above, in the case of a Mortgage Loan with an LTV greater than 80%,
as determined by the appraisal referred to in clause (ii)(A)(1) and (B) in the
case of a Mortgage Loan originated in connection with a "lease-option
purchase", such value of the Mortgaged Property is based on the lower of the
value determined by an appraisal made for the Originator of such Mortgage Loan
at the time or origination or the sale price of such Mortgaged Property if the
"lease option purchase price" was set less than 12 months prior to
origination, and is based on the value determined by an appraisal made for the
originator of such Mortgage Loan at the time of origination if the "lease
option purchase price" was set 12 months or more prior to origination.
40
"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. With respect to any
date of determination, 95% of all voting rights will be allocated among all
Holders of the Offered Certificates, other than the Class A-IO Certificates,
in proportion to their then outstanding Certificate Principal Balances, 1% of
all voting rights will be allocated among the Holders of the Class X
Certificates; 1% of all voting rights will be allocated among the Holders of
the Class A-IO Certificates; 1% of all voting rights will be allocated among
the Holders of the Class B-IO Certificates;1% of all voting rights will be
allocated among the Holders of the Class P Certificates, and 1% of all voting
rights will be allocated among Holders of the Residual Certificates, in each
case in proportion to the Percentage Interests evidenced by their respective
Certificates.
"Yield Maintenance Agreement": The interest rate yield
maintenance agreement consisting of the ISDA Master Agreement and the Schedule
dated as of the Closing Date and the Confirmation thereto, between the Trustee
on behalf of the Trust and the Counterparty, as such agreement may be amended
and supplemented in accordance with its terms and any replacement interest
yield maintenance agreement acceptable to the Depositor and the Trustee.
SECTION 1.02. Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of Accrued
Certificate Interest for the Class A Certificates, the A-IO Certificates, the
Subordinated Certificates and the Class X Certificates for any Distribution
Date, the aggregate amount of any Prepayment Interest Shortfalls (to the
extent not covered by payments by the Servicer pursuant to Section 3.24) and
any Relief Act Interest Shortfall incurred in respect of the Mortgage Loans
for any Distribution Date shall be allocated to the Class X Certificates in
reduction of the Class X Distribution Amount and thereafter, among the Class A
Certificates, Class A-IO Certificates and the other Classes of Subordinated
Certificates on a pro rata basis based on, and to the extent of, one month's
interest at the then applicable respective Pass-Through Rate on the respective
Certificate Principal Balance or Notional Amount of each such Certificate.
SECTION 1.03. Designation of Interests in REMIC
The Trustee shall elect that each of REMIC I, REMIC II,
REMIC III, REMIC IV and REMIC V shall be treated as a REMIC under Section 860D
of the Code. Any inconsistencies or ambiguities in this Agreement or in the
administration of this Agreement shall be resolved in a manner that preserves
the validity of such REMIC elections. The assets of REMIC I shall include the
Mortgage Loans, the accounts (other than the Net WAC Fund and the Pre-Funding
Account), any REO Property, and any proceeds of the foregoing. The REMIC I
Regular Interests shall constitute the assets of REMIC II. The REMIC II
Regular Interests shall constitute the assets of REMIC III. The REMIC III
Regular Interests shall constitute the assets of REMIC IV. The REMIC IV
Regular Interests shall constitute the assets of REMIC V.
REMIC I:
The REMIC I Regular Interests shall have the following
principal balances, and the pass-through rates in the manner set forth in the
following table:
41
Initial Initial Rate Notional Balance
REMIC Interests Interest Corresponding Change of the Interest
Interest Balance Rate REMIC II Interest Date Rate Swap(1)
-------- ---------- -------- ----------------- ------- -----------------
T1-A (2) Net WAC T2-A N/A N/A
T1-SA(1) 4,000,000.00 Net WAC T2-SA-IO(1) 6/15/2002 171,400,000.00
T1-SA(2) 3,900,000.00 Net WAC T2-SA-IO(2) 7/15/2002 167,400,000.00
T1-SA(3) 3,800,000.00 Net WAC T2-SA-IO(3) 8/15/2002 163,500,000.00
T1-SA(4) 3,700,000.00 Net WAC T2-SA-IO(4) 9/15/2002 159,700,000.00
T1-SA(5) 3,600,000.00 Net WAC T2-SA-IO(5) 10/15/2002 156,000,000.00
T1-SA(6) 3,500,000.00 Net WAC T2-SA-IO(6) 11/15/2002 152,400,000.00
T1-SA(7) 3,500,000.00 Net WAC T2-SA-IO(7) 12/15/2002 148,900,000.00
T1-SA(8) 3,300,000.00 Net WAC T2-SA-IO(8) 1/15/2003 145,400,000.00
T1-SA(9) 3,300,000.00 Net WAC T2-SA-IO(9) 2/15/2003 142,100,000.00
T1-SA(10) 3,300,000.00 Net WAC T2-SA-IO(10) 3/15/2003 138,800,000.00
T1-SA(11) 3,100,000.00 Net WAC T2-SA-IO(11) 4/15/2003 135,500,000.00
T1-SA(12) 3,100,000.00 Net WAC T2-SA-IO(12) 5/15/2003 132,400,000.00
T1-SA(13) 3,000,000.00 Net WAC T2-SA-IO(13) 6/15/2003 129,300,000.00
T1-SA(14) 2,900,000.00 Net WAC T2-SA-IO(14) 7/15/2003 126,300,000.00
T1-SA(15) 2,900,000.00 Net WAC T2-SA-IO(15) 8/15/2003 123,400,000.00
T1-SA(16) 2,800,000.00 Net WAC T2-SA-IO(16) 9/15/2003 120,500,000.00
T1-SA(17) 2,700,000.00 Net WAC T2-SA-IO(17) 10/15/2003 117,700,000.00
T1-SA(18) 2,700,000.00 Net WAC T2-SA-IO(18) 11/15/2003 115,000,000.00
T1-SA(19) 2,600,000.00 Net WAC T2-SA-IO(19) 12/15/2003 112,300,000.00
T1-SA(20) 2,600,000.00 Net WAC T2-SA-IO(20) 1/15/2004 109,700,000.00
T1-SA(21) 2,500,000.00 Net WAC T2-SA-IO(21) 2/15/2004 107,100,000.00
T1-SA(22) 2,400,000.00 Net WAC T2-SA-IO(22) 3/15/2004 104,600,000.00
T1-SA(23) 2,400,000.00 Net WAC T2-SA-IO(23) 4/15/2004 102,200,000.00
T1-SA(24) 2,300,000.00 Net WAC T2-SA-IO(24) 5/15/2004 99,800,000.00
T1-SA(25) 2,300,000.00 Net WAC T2-SA-IO(25) 6/15/2004 97,500,000.00
T1-SA(26) 2,200,000.00 Net WAC T2-SA-IO(26) 7/15/2004 95,200,000.00
T1-SA(27) 2,100,000.00 Net WAC T2-SA-IO(27) 8/15/2004 93,000,000.00
T1-SA(28) 2,100,000.00 Net WAC T2-SA-IO(28) 9/15/2004 90,900,000.00
T1-SA(29) 2,100,000.00 Net WAC T2-SA-IO(29) 10/15/2004 88,800,000.00
T1-SA(30) 86,700,000.00 Net WAC T2-SA-IO(30) 11/15/2004 86,700,000.00
T1-P $100 (3) N/A N/A N/A
(1) For the period between the Rate Change Date for the T1-SA
Regular Interest with a numerical domination one less than
said T1-SA Regular Interest (or in the case of the T1-SA(1),
the Closing Date) and the Rate Change Date for the said
T1-SA Regular Interest.
(2) Pool Principal Balance less the Class of the Class T1-SA
Regular Interests.
(3) The Class T1-P Interests will not be entitled to payments of
interest, but will be entitled to all Prepayment Charges
received in respect of the Mortgage Loans.
On each Distribution Date, all Realized Losses and all payments of principal
will be allocated to the Class T1-A until such Class is reduced to zero. After
the Class T1-A is reduced to zero, all
42
Realized Losses and all payments of principal will be allocated to the
outstanding Class of the Class T1-SA with the lowest numerical denomination
until such Class is reduced to zero.
REMIC II:
The REMIC II Regular Interests shall have the following
principal balances, and the pass-through rates in the manner set forth in the
following table:
Initial Initial Rate
REMIC Interests Interest Corresponding Change Notional Balance of
Interest Balance Rate REMIC II Interest Date the A-IO(1)
--------- ---------- --------- ----------------- -------- ---------------------
T2-A (2) Adjusted Net WAC N/A N/A N/A
T2-SB(1) 112,180,000 Adjusted Net WAC T3-SB-IO(1) 6/15/2002 2,780,000
T2-SB(2) 109,400,000 Adjusted Net WAC T3-SB-IO(2) 7/15/2002 2,800,000
T2-SB(3) 106,600,000 Adjusted Net WAC T3-SB-IO(3) 8/15/2002 2,700,000
T2-SB(4) 103,900,000 Adjusted Net WAC T3-SB-IO(4) 9/15/2002 2,700,000
T2-SB(5) 101,200,000 Adjusted Net WAC T3-SB-IO(5) 10/15/2002 2,500,000
T2-SB(6) 98,700,000 Adjusted Net WAC T3-SB-IO(6) 11/15/2002 2,500,000
T2-SB(7) 96,200,000 Adjusted Net WAC T3-SB-IO(7) 12/15/2002 2,500,000
T2-SB(8) 93,700,000 Adjusted Net WAC T3-SB-IO(8) 1/15/2003 2,400,000
T2-SB(9) 91,300,000 Adjusted Net WAC T3-SB-IO(9) 2/15/2003 2,300,000
T2-SB(10) 89,000,000 Adjusted Net WAC T3-SB-IO(10) 3/15/2003 2,300,000
T2-SB(11) 86,700,000 Adjusted Net WAC T3-SB-IO(11) 4/15/2003 2,100,000
T2-SB(12) 84,600,000 Adjusted Net WAC T3-SB-IO(12) 5/15/2003 2,200,000
T2-SB(13) 82,400,000 Adjusted Net WAC T3-SB-IO(13) 6/15/2003 2,100,000
T2-SB(14) 80,300,000 Adjusted Net WAC T3-SB-IO(14) 7/15/2003 2,100,000
T2-SB(15) 78,200,000 Adjusted Net WAC T3-SB-IO(15) 8/15/2003 2,000,000
T2-SB(16) 76,200,000 Adjusted Net WAC T3-SB-IO(16) 9/15/2003 1,800,000
T2-SB(17) 74,400,000 Adjusted Net WAC T3-SB-IO(17) 10/15/2003 2,000,000
T2-SB(18) 72,400,000 Adjusted Net WAC T3-SB-IO(18) 11/15/2003 1,800,000
T2-SB(19) 70,600,000 Adjusted Net WAC T3-SB-IO(19) 12/15/2003 1,800,000
T2-SB(20) 68,800,000 Adjusted Net WAC T3-SB-IO(20) 1/15/2004 1,700,000
T2-SB(21) 67,100,000 Adjusted Net WAC T3-SB-IO(21) 2/15/2004 1,800,000
T2-SB(22) 65,300,000 Adjusted Net WAC T3-SB-IO(22) 3/15/2004 1,600,000
T2-SB(23) 63,700,000 Adjusted Net WAC T3-SB-IO(23) 4/15/2004 1,600,000
T2-SB(24) 62,100,000 Adjusted Net WAC T3-SB-IO(24) 5/15/2004 1,600,000
T2-SB(25) 60,500,000 Adjusted Net WAC T3-SB-IO(25) 6/15/2004 1,600,000
T2-SB(26) 58,900,000 Adjusted Net WAC T3-SB-IO(26) 7/15/2004 1,500,000
T2-SB(27) 57,400,000 Adjusted Net WAC T3-SB-IO(27) 8/15/2004 1,400,000
T2-SB(28) 56,000,000 Adjusted Net WAC T3-SB-IO(28) 9/15/2004 1,500,000
T2-SB(29) 54,500,000 Adjusted Net WAC T3-SB-IO(29) 10/15/2004 1,300,000
T2-SB(30) 53,200,000 Adjusted Net WAC T3-SB-IO(30) 11/15/2004 53,200,000
T2-SAIO (3) (3) (3) N/A N/A
T2-P $100 (4) T3-P N/A N/A
(1) For the period between the Rate Change Date for the T2-SB
Regular Interest with a numerical domination one less than
such T2-SB Regular Interest (or in the case of the T2-SB(1)
Regular Interest, the Closing Date) and the Rate Change Date
for such T2-SB Regular Interest.
43
(2) Principal balance equal to the REMIC I Regular Interests
less the balance of the T2-SB Regular Interest, and the T2-P
Regular Interest.
(3) The T2-SAIO will represent 30 REMIC regular interests
numbered (1) through (30). Each will have a rate equal to,
from the Closing Date through each respective Rate Change
Date, 0.2175%, and thereafter, 0%.
(4) The Class T2-P Interests will not be entitled to payments of
interest, but will be entitled to all Prepayment Charges
received in respect of the Mortgage Loans. For federal
income tax purposes, the Class T2-P will represent 100% of
the interest of the Class T1-P.
On each Distribution Date, all Realized Losses and all payments of principal
will be allocated to the Class T2-A until such Class is reduced to zero. After
the Class T2-A is reduced to zero, all Realized Losses and all payments of
principal will be made to the outstanding Class of the Class T2-SB Regular
Interests with the lowest numerical denomination until such Class is reduced
to zero.
REMIC III:
The REMIC III Regular Interests shall have the following
principal balances, and pass-through rates in the manner set forth in the
following table:
REMIC Initial Interest
Interests Balance Rate
T3-A (1) Double Adjusted
Net WAC
T3-B $70,000,000 Double Adjusted
Net WAC
T3-SA (2) (2)
T3-AIO (3) (3)
T3-P $100 (4)
(1) The principal balance is equal to the principal balance of
all REMIC II Regular Interest less the principal balance of
the Class T3-B Regular Interest and the Class T3-P Regular
Interest.
(2) The Class T3-SA will not have a principal balance, but will
be entitled to receive 100% of the interest of all of the
Class T2-SAIO.
(3) The T3-AIO will represent 30 REMIC regular interests
numbered (1) through (30). Each will have a rate equal to
from the Closing Date through each respective Rate Change
Date, 6.50%, and thereafter, 0%.
(4) The Class T3-P Interests will not be entitled to payments of
interest, but will be entitled to all Prepayment Penalties
received in respect of the Mortgage Loans. For federal
income tax purposes, the T3-P will be entitle to 100% of the
payments received from the T2-P regular interest.
44
On each Distribution Date, all Realized Losses all payments of principal will
be allocated to the Class T3-A until such class is reduced to zero. After the
Class T3-A is reduced to zero, all Realized Losses and payments of principal
will be allocated to the Class T3-B until such Class is reduced to zero.
REMIC IV:
The REMIC IV Regular Interests, each of which (expect for
the Class R-IV Interests) is hereby designated a regular interest in REMIC IV,
shall have the following principal balances, pass-through rates and
Corresponding Classes of Certificates in the manner set forth in the following
table:
Corresponding
REMIC Initial Interest Class of Master
Interests Balance Rate REMIC Interest
T4-A1 (1) 1/2 Corresponding Class Triple Adjusted Net WAC A1
balance
T4-A2 (1) 1/2 Corresponding Class Triple Adjusted Net WAC A2
balance
T4-M1(1) 1/2 Corresponding Class Triple Adjusted Net WAC M1
balance
T4-M2(1) 1/2 Corresponding Class Triple Adjusted Net WAC M2
balance
T4-B(1) 1/2 Corresponding Class Triple Adjusted Net WAC B
balance
T4-P 100 (2) P
T4-Accrual Interest 1/2 Pool Principal Balance Triple Adjusted Net WAC N/A
plus1/2the
Overcollateralized Amount
less $100
T4-A-IO (3) (3) N/A
T4-B-IO (4) (4) N/A
T4-Strip Amount (5) (5) X/X
X-XX X/X X/X X/X
(1) The REMIC IV Accretion Directed Class.
(2) The Class T4-P Interests will not be entitled to payments of
interest, but will be entitled to all Prepayment Charges
received in respect of the Mortgage Loans. For federal
income tax purposes, the Class T4-P will be entitle to 100%
of all payments received by the Class T3-P Regular Interest.
(3) The Class T4-A-IO Interest will have a notional balance
equal to the notional balance of the T3-A-IO Interest.
(4) The Class T4-B-IO will not have a principal balance, but
will have a notional balance equal to the principal balance
of the T3-B Regular Interest, and a Pass-
45
Through Rate equal to: (a) from the Closing Date through the
Rate Change Date, 3.50%, and thereafter, 0%.
(5) The Class T4-Strip Amount will not have a principal balance,
but will receive 100% of the interest from the Class T3-SA.
On each Distribution Date, 50% of the increase in the
Overcollateralized Amount will be payable as a reduction of the principal
balances of the REMIC IV Accretion Directed Classes (each such Class will be
reduced by an amount equal to 50% of any increase in the Overcollateralized
Amount that is attributable to a reduction in the principal balance of its
Corresponding Class) and will be accrued and added to the principal balance of
the T-4 Accrual Interest. On each Distribution Date, the increase in the
principal balance of the T-4 Accrual Interest may not exceed interest accruals
for such Distribution Date for the T-4 Accrual Interest.
In the event that: (i) 50% of the increase in the
Overcollateralized Amount exceeds (ii) interest accruals on the T-4 Accrual
Interest for such Distribution Date, the excess for such Distribution Date
(accumulated with all such excesses for all prior Distribution Dates) will be
added to any increase in the Overcollateralized Amount for purposes of
determining the amount of interest accrual on the T-4 Accrual Interest payable
as principal on the REMIC IV Accretion Directed Class on the next Distribution
Date pursuant to the first sentence of this paragraph. All payments of
principal generated by the Mortgage Loans shall be allocated 50% to the T-4
Accrual Interest, and 50% to the REMIC IV Accretion Directed Classes (in an
amount equal to 50% of the principal amounts allocated to their respective
Corresponding Classes), until paid in full. Notwithstanding the above,
principal payments allocated to the Class X Certificates that result in the
reduction in the Overcollateralized Amount shall be allocated to the T-4
Accrual Interest (until paid in full). Realized losses shall be applied so
that after all distributions have been made on each Distribution Date (i) the
principal balances of each of the REMIC IV Accretion Directed Class is equal
to 50% of the principal balance of its respective Corresponding Class, and
(ii) the T-4 Accrual Interest is equal to 50% of the aggregate principal
balance of the Mortgage Pool plus 50% of the Overcollateralized Amount.
REMIC V:
The following table sets forth characteristics of the
Certificates, each of which, except for the Class R Certificates, is hereby
designated as a "regular interest" in the REMIC V:
Original Certificate
Principal Pass-Through
Balance Rate
Class A1 $357,948,000 (1)
Class A2 $357,948,000 (1)
Class A-IO (2) (2)
Class M1 $62,161,000 (1)
Class M2 $45,020,000 (1)
Class B $34,295,390 (1)
Class B-IO (3) (3)
Class X (4) (4)
Class P $100 (5)
46
Strip Amount (6) (6)
Class R (7) N/A N/A
(1) The lesser of the related Formula Rate and Triple Adjusted
Net WAC. Any entitlement to Net WAC Carryover Amounts will
not be an obligation of any REMIC created hereunder.
(2) The Class A-IO Certificates will be entitled to 100% of the
interest distributions in respect of the Class T4-A-IO
Interests.
(3) The Class B-IO Certificates will be entitled to 100% of the
interest distributions in respect of the Class T4-B-IO
Interests.
(4) The Class X Certificates will have a notional balance equal
to the aggregate Stated Principal Balance of the Mortgage
Loans. The Pass-Through Rate in respect of the Class X
Certificates will be the excess of: (i) Triple Adjusted Net
WAC over (ii) the product of: (A) two and (B) the weighted
average Pass-Through Rate of the REMIC IV Interests, where
the T-4 Accrual Interest is subject to a cap equal to zero
and each REMIC IV Accretion Directed Classes is subject to a
cap equal to the Pass-Through Rate on its Corresponding
Class.
(5) The Class P Certificates will not be entitled to payments of
interest, but will be entitle to receive all Prepayment
Charges in respect of the Mortgage Loans. For federal income
tax purposes, the Class P Certificate will have the right to
receive 100% of the amounts received from the Class T4-P
regular interests.
(6) The Strip Amount will be a REMIC regular interest of REMIC
V. The Strip Amount will not have a principal balance, but
will receive 100% of the amount received from Class T4-SA.
(7) The Class R Certificates will represent the beneficial
ownership of the R-I, R-II, R-III, R-IV and R-V Interests,
which will represent the sole class of residual interests in
each of REMIC I, REMIC II, REMIC III, REMIC IV and REMIC V.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and
delivery hereof, does hereby establish the Trust and transfer, assign, set
over and otherwise convey to the Trustee without recourse for the benefit of
the Certificateholders all the right, title and interest of the Depositor,
including any security interest therein for the benefit of the Depositor, in
and to the Initial Mortgage Loans identified on the Mortgage Loan Schedule,
the rights of the Depositor under the Assignment and Assumption Agreement,
each Mortgage Loan Purchase Agreement and each Reconstitution Agreement, and
all other assets included or to be included in the Trust Fund. Such assignment
includes all interest and principal received by the Seller, the Depositor or
the Servicer on or with respect to the Initial Mortage Loans (other than
payments of principal
47
and interest due on such Initial Mortgage Loans on or before the Initial
Cut-off Date). The Depositor herewith delivers to the Trustee an executed copy
of each Reconstitution Agreement. In addition, on or prior to the Closing
Date, the Trustee shall execute the Yield Maintenance Agreement and the
Depositor hereby directs the Trustee to do so. With respect to any Initial
Mortgage Loan that does not have a first payment date during the Due Period
related to the first Distribution Date or any Subsequent Mortgage Loan that
does not have a first payment date during the Due Period related to the first
Distribution Date following the related Subsequent Transfer Date, the
Depositor shall deposit into the Distribution Account on or before the
Servicer Remittance Date relating to the applicable Distribution Date, an
amount equal to one month's interest at the related Net Mortgage Rate on the
Cut-off Date Principal Balance of such Mortgage Loan.
If the assignment and transfer of the Initial Mortgage Loans
and the other property specified in this Section 2.01 from the Depositor to
the Trustee pursuant to this Agreement is held or deemed not to be a sale or
is held or deemed to be a pledge of security for a loan, the Depositor intends
that the rights and obligations of the parties shall be established pursuant
to the terms of this Agreement and that, in such event, (i) the Depositor
shall be deemed to have granted and does hereby grant to the Trustee as of the
Closing Date a perfected, first priority security interest in the entire
right, title and interest of the Depositor in and to the Initial Mortage Loans
and all other property conveyed to the Trust Fund pursuant to this Section
2.01 and all proceeds thereof, and (ii) this Agreement shall constitute a
security agreement under applicable law.
In connection with such transfer and assignment, the
Depositor does hereby deliver to, and deposit with the Trustee or the
Custodian, the following documents or instruments with respect to each Initial
Mortgage Loan so transferred and assigned the following documents or
instruments with respect to each Subsequent Mortgage Loan (each, a "Mortgage
File"):
(i) the related electronic Mortgage Loan Schedule, if available;
(ii) the original Mortgage Note, endorsed in blank or in the
following form: "Pay to the order of Xxxxx Fargo Bank Minnesota,
N.A., as Trustee under the applicable agreement, without
recourse," with all prior and intervening endorsements showing a
complete chain of endorsement from the originator to the Person
so endorsing to the Trustee or a copy of such original Mortgage
Note with an accompanying lost note affidavit executed by the
Seller;
(iii) the original Mortgage with evidence of recording thereon,
and a copy, certified by the appropriate recording office, of the
recorded power of attorney, if the Mortgage was executed pursuant
to a power of attorney, with evidence of recording thereon;
(iv) an original Assignment of the Mortgage in blank;
(v) the original recorded Assignment or Assignments of the
Mortgage showing a complete chain of assignment from the
originator to the Person assigning the Mortgage to the Trustee or
as contemplated by the preceding clause (iv);
48
(vi) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vii) the original lender's title insurance policy, if
available, together with all endorsements or riders which were
issued with or subsequent to the issuance of such policy,
insuring the priority of the Mortgage as a first lien on the
Mortgaged Property represented therein as a fee interest vested
in the Mortgagor, or in the event such original title policy is
unavailable, a written commitment or uniform binder or
preliminary report of title issued by the title insurance or
escrow company, if available.
The Depositor hereby represents that, on the Closing Date
(i) no more than 1% of the Initial Mortage Loans by Stated Principal Balance
as of the Cut-off Date may have lost note affidavits in lieu of the original
Mortgage Notes and (ii) the applicable Originator or, in the case of the Long
Beach Mortgage Loans and the DLJMC Mortgage Loans, the Seller shall deliver to
the Trustee or the Custodian a copy of the original Mortgage Note for each
Mortgage Loan with respect to which a lost note affidavit is delivered.
The Depositor shall cause the related Originator or, in the
case of the Long Beach Mortgage Loans and the DLJMC Mortgage Loans, the Seller
to promptly (and in no event later than thirty (30) Business Days, subject to
extension upon a mutual agreement among the Depositor, the Servicer and the
Trustee, following the later of the Closing Date and the date of receipt by
the Servicer or the Trustee, as the case may be, of the recording information
for a Mortgage) submit or cause to be submitted to the Custodian for
recording, at no expense to the Trust Fund, the Servicer or the Trustee, in
the appropriate public office for real property records, each Assignment
referred to in clauses (iv) and (v) above in this Section 2.01(a) and shall
execute each original Assignment in the following form: "Xxxxx Fargo Bank
Minnesota, N.A., as Trustee under the applicable agreement, without recourse."
In the event that any such Assignment is lost or returned unrecorded because
of a defect therein, the Depositor shall or shall cause the related Originator
or the Seller, as the case may be, to promptly prepare or cause to be prepared
a substitute Assignment or cure or cause to be cured such defect, as the case
may be, and thereafter cause each such Assignment to be duly recorded.
If any of the documents referred to in clauses (ii), (iv),
(v) or (vi) above in this Section 2.01(a) has as of the Closing Date been
submitted for recording but either (x) has not been returned from the
applicable public recording office or (y) has been lost or such public
recording office has retained the original of such document, the obligations
of the Depositor to deliver such documents shall be deemed to be satisfied
upon (1) delivery to the Trustee or the Custodian of a copy of each such
document certified by the Originator or, in the case of the Long Beach
Mortgage Loans and the DLJMC Mortgage Loans, the Seller, in the case of (x)
above or the applicable public recording office in the case of (y) above to be
a true and complete copy of the original that was submitted for recording and
(2) if such copy is certified by the related Originator or, in the case of the
Long Beach Mortgage Loans and the DLJMC Mortgage Loans, the Seller, delivery
to the Trustee or the Custodian promptly upon receipt thereof of either the
original or a copy of such document certified by the applicable public
recording office to be a true and complete copy of the original. If the
original lender's title insurance policy was not delivered pursuant to clause
(vii) above in this Section 2.01(a), the Depositor shall deliver or cause to
be delivered to the Trustee or the Custodian promptly after receipt thereof,
the original
49
lender's title insurance policy, if available. The Depositor shall deliver or
cause to be delivered to the Trustee or the Custodian promptly upon receipt
thereof any other original documents constituting a part of a Mortgage File
received with respect to any Mortgage Loan, including, but not limited to, any
original documents evidencing an assumption or modification of any Mortgage
Loan.
All original documents relating to the Mortgage Loans that
are not delivered to the Trustee or the Custodian are and shall be held by or
on behalf of the Seller, the Depositor or the Servicer, as the case may be, in
trust for the benefit of the Trustee on behalf of the Certificateholders. In
the event that any such original document is required pursuant to the terms of
this Section to be a part of a Mortgage File, such document shall be delivered
promptly to the Trustee or the Custodian. Any such original document delivered
to or held by the Depositor that is not required pursuant to the terms of this
Section to be a part of a Mortgage File, shall be delivered promptly to the
Servicer.
(b) The Depositor hereby sells, transfers, assigns, sets
over and otherwise conveys to the Trustee in trust for the benefit of the
Certificateholders, without recourse, all right title and interest in such
Subsequent Mortgage Loans, including all interest and principal due on or with
respect to such Subsequent Mortgage Loans on or after the related Cut-off Date
and all interest and principal payments on such Subsequent Mortgage Loans
received prior to the Cut-off Date in respect of installments of interest and
principal due thereafter, but not including principal and interest due on such
Subsequent Mortgage Loans prior to the related Cut-off Date, any insurance
policies in respect of such Subsequent Mortgage Loans and all proceeds of any
of the foregoing.
(c) Upon three Business Day's prior written notice to the
Custodian, the Trustee, the Servicer and the Rating Agencies, on any Business
Day during the Pre-Funding Period designated by the Depositor, the Depositor,
the Servicer and the Trustee shall complete, execute and deliver a Subsequent
Transfer Agreement so long as no Rating Agency has provided notice that the
execution and delivery of such Subsequent Transfer Agreement will result in a
reduction or withdrawal of the ratings assigned to the Certificates.
The transfer of Subsequent Mortgage Loans and the other
property and rights relating to them on a Subsequent Transfer Date is subject
to the satisfaction of each of the following conditions:
(i) each Subsequent Mortgage Loan conveyed on such
Subsequent Transfer Date satisfies the representations
and warranties applicable to it under this Agreement as
of the applicable Subsequent Transfer Date; provided,
however, that with respect to a breach of a
representation and warranty with respect to a Subsequent
Mortgage Loan, the obligation under Section 2.03(c) of
this Agreement of the Seller to cure, repurchase or
replace such Subsequent Mortgage Loan shall constitute
the sole remedy against the Seller respecting such breach
available to Certificateholders, the Depositor or the
Trustee;
(ii) the Trustee and the Rating Agencies are provided with
an Opinion of Counsel or Opinions of Counsel, at the
expense of the Depositor, with respect to the
50
qualification of the Trust Fund as a REMIC, to be
delivered as provided pursuant to Section 2.01(d);
(iii) the Rating Agencies and the Trustee are provided with
an Opinion of Counsel or Opinions of Counsel, at the
expense of the Depositor, with respect to the
characterization of the transfer of the Subsequent
Mortgage Loans conveyed on such Subsequent Transfer Date
as a sale, to be delivered as provided pursuant to
Section 2.01(d); and
(iv) the execution and delivery of such Subsequent Transfer
Agreement or conveyance of the related Subsequent
Mortgage Loans does not result in a reduction or
withdrawal of any ratings assigned to the Certificates by
the Rating Agencies;
(v) no Subsequent Mortgage Loan conveyed on such Subsequent
Transfer Date was 30 or more days contractually Delinquent
as of such date;
(vi) the remaining term to stated maturity of such Subsequent
Mortgage Loan will not exceed 30 years;
(vii) such Subsequent Mortgage Loan will not have a Mortgage
Rate less than 6.000% per annum;
(viii) the Depositor shall have deposited in the Collection
Account all principal and interest collected with respect
to the related Subsequent Mortgage Loans on or after the
related Cut-off Date;
(ix) such Subsequent Mortgage Loan will not have a Loan-to-
Value Ratio greater than 100%;
(x) no Subsequent Mortgage Loan shall have a maturity date
after July 2032;
(xi) such Subsequent Mortgage Loan will not have an original
Loan-to-Value Ratio greater than 100%;
(xii) such Subsequent Mortgage Loan will have a principal
balance not greater than $650,000;
(xiii) such Subsequent Mortgage Loan will be secured by a first
or second lien on a Mortgaged Property; and
(xiv) such Subsequent Mortgage Loan will be otherwise acceptable
to the Rating Agencies;
(xv) following the conveyance of the Subsequent Mortgage
Loans on such Subsequent Transfer Date the
characteristics of the Mortgage Loans in the Mortgage
Pool will be as follows:
51
(A) weighted average current Loan Rate of at least
8.700% per annum;
(B) a weighted average remaining term to stated
maturity of less than 352 months;
(C) a weighted average Loan-to-Value Ratio of not
more than 80%;
(D) no more than 40% of the Mortgage Loans by
aggregate Stated Principal Balance at the end
of the Pre-Funding Period will be
concentrated in one state; and
(E) no more than 7.00% of the Mortgage Loans by
aggregate Cut-off Date Principal Balance will
relate to non-owner occupied properties;
(F) no more than 2.50% of the Mortgage Loans will
be secured by a second lien on a Mortgaged
Property
(G) neither the Seller nor the Depositor shall be
insolvent or shall be rendered insolvent as a
result of such transfer;
(H) no Event of Default has occurred hereunder;
(I) the Depositor shall have delivered to the
Trustee an Officer's Certificate confirming
the satisfaction of each of these conditions
precedent; and
(J) each Mortgage Loan constitutes a "qualified
mortgage" within the meaning of Section
860G(a)(3) of the Code.
(d) Upon (1) delivery to the Trustee by the Depositor of the
Opinions of Counsel referred to in Sections 2.01(c)(ii) and (iii), (2)
delivery to the Trustee by the Depositor of a revised Mortgage Loan Schedule
reflecting the Subsequent Mortgage Loans conveyed on such Subsequent Transfer
Date and the related Subsequent Mortgage Loans and (3) delivery to the Trustee
by the Depositor of an Officer's Certificate confirming the satisfaction of
each of the conditions precedent set forth in Section 2.01(c), the Trustee
shall remit to the Depositor the Aggregate Subsequent Transfer Amount related
to the Subsequent Mortgage Loans transferred by the Depositor on such
Subsequent Transfer Date from funds in the Pre-Funding Account.
The Trustee shall not be required to investigate or otherwise verify
compliance with the conditions set forth in the preceding paragraph, except
for its own receipt of documents specified above, and shall be entitled to
rely on the required Officer's Certificate.
SECTION 2.02. Acceptance of REMIC I by the Trustee.
Subject to the provisions of Section 2.01 and subject to any
exceptions noted on the exception report described in the next paragraph
below, the Trustee acknowledges receipt of the documents referred to in
Section 2.01 (other than such documents described in Section 2.01(a)(v)) above
and all other assets included under clauses (i), (iii), (iv) and (v) of the
52
definition of "REMIC I" (to the extent of amounts deposited into the
Distribution Account) and declares that the Trustee through the Custodian
holds and will hold such documents and the other documents delivered to it
constituting the Mortgage File on behalf of the Trust, and that it holds or
will hold all such assets and such other assets included in the definition of
"REMIC I" in trust for the exclusive use and benefit of all present and future
Certificateholders. The Trustee also acknowledges receipt of the amounts on
deposit in the Net WAC Fund and the Pre-Funding Account in trust for the
exclusive use and benefit of all present and future Certificateholders.
The Trustee, agrees, for the benefit of the
Certificateholders, on or before the Closing Date, to or to cause the
Custodian to review each Mortgage File and to certify in substantially the
form attached hereto as Exhibit C-1 that, as to each Initial Mortage Loan
listed in the Mortgage Loan Schedule (other than any Initial Mortage Loan paid
in full or any Initial Mortage Loan specifically identified in the exception
report annexed thereto as not being covered by such certification), (i) all
documents constituting part of such Mortgage File (other than such documents
described in Section 2.01(a)(v)) required to be delivered to it pursuant to
this Agreement are in its possession, (ii) such documents have been reviewed
by it and are not mutilated, torn or defaced unless initialed by the related
borrower and relate to such Initial Mortage Loan and (iii) based on its
examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule that corresponds to items (i) through (iii), (ix),
(xii) and (xviii) through (xx) of the definition of "Mortgage Loan Schedule"
accurately reflects information set forth in the Mortgage File. It is herein
acknowledged that, in conducting such review, neither the Trustee nor the
Custodian was under any duty or obligation (i) to inspect, review or examine
any such documents, instruments, certificates or other papers to determine
whether they are genuine, enforceable, or appropriate for the represented
purpose (including with respect to Section 2.01(a)(vii), whether such title
insurance policy insures the priority of the Mortgage as a first lien) or
whether they have actually been recorded or that they are other than what they
purport to be on their face or (ii) to determine whether any Mortgage File
should include any of the documents specified in Section 2.01(a)(v).
Prior to the first anniversary date of this Agreement, the
Trustee shall cause the Custodian to deliver to the Depositor and the Servicer
a final certification in the form annexed hereto as Exhibit C-2 evidencing the
completeness of the Mortgage Files, with any applicable exceptions noted
thereon.
If in the process of reviewing the Mortgage Files and making
or preparing, as the case may be, the certifications referred to above, the
Trustee or the Custodian finds any document or documents constituting a part
of a Mortgage File to be missing or defective in any material respect, at the
conclusion of its review the Trustee shall so notify the Depositor, the Seller
and the Servicer. In addition, upon the discovery by the Depositor, the
Servicer, the Custodian or the Trustee of a breach of any of the
representations and warranties made by any Originator or the Seller in the
related Mortgage Loan Purchase Agreement, the Letter Agreement or this
Agreement, as applicable, in respect of any Initial Mortage Loan which
materially adversely affects such Initial Mortage Loan or the interests of the
related Certificateholders in such Initial Mortage Loan, the party discovering
such breach shall give prompt written notice to the other parties.
53
Enforcement of each Mortgage Loan Purchase Agreement, the
Letter Agreement or this Agreement against the related Originator or the
Seller, as the case may be, shall be effected by the Trustee. The Trustee
shall pay the costs of such enforcement at its own expense, and shall be
reimbursed therefor only (i) from a general recovery resulting from such
enforcement, to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loans or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the Person against which such
enforcement is directed; provided, however, if the sources of reimbursement
described in clauses (i) and (ii) are insufficient, the Trustee may seek
reimbursement for any remaining unreimbursed costs of such enforcement from
the Trust Fund as an Extraordinary Trust Fund Expense.
The Trustee agrees to cause the Custodian to execute and deliver on
each Subsequent Transfer Date to the Depositor and the Servicer a Subsequent
Certification in the form annexed hereto as Exhibit C-1. Based on its or the
Custodian's review and examination, and only as to the documents identified in
such Subsequent Certification, the Trustee shall cause the Custodian to
acknowledge that such documents appear regular on their face and relate to
such Subsequent Mortgage Loan. The Trustee and the Custodian shall be under no
duty or obligation to or to cause the Custodian to inspect, review or examine
said documents, instruments, 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 in the real estate records or that
they are other than what they purport to be on their face.
Not later than one year following the Closing Date, the Trustee shall
cause the Custodian to deliver to the Depositor and the Servicer a Final
Certification with respect to the Subsequent Mortgage Loans in the form
annexed hereto as Exhibit C-2 with any applicable exceptions noted thereon.
If, in the course of such review of the Mortgage Files
relating to the Subsequent Mortgage Loans, the Custodian finds any document
constituting a part of a Mortgage File which does not meet the requirements of
Section 2.01, the Custodian (upon discovery of such Mortgage File) shall list
the exception in the Final Certification; provided, however that neither the
Trustee nor the Custodian shall make any determination as to whether (i) any
endorsement is sufficient to transfer all right, title and interest of the
party so endorsing, as noteholder or assignee thereof, in and to that Mortgage
Note or (ii) any assignment is in recordable form or is sufficient to effect
the assignment of and transfer to the assignee thereof under the mortgage to
which the assignment relates. The Depositor shall cure any such defect or
repurchase or substitute for any such Mortgage Loan in accordance with Section
2.03(a).
SECTION 2.03. Repurchase or Substitution of Mortgage Loans
by the Originators, the Seller or the
Depositor; Payment of Prepayment Charges
in the Event of Breach.
(a) Upon receipt of notice by a responsible officer in the
Corporate Trust Office of the Trustee of any materially defective document in,
or that a document is missing from, the Mortgage File or of the breach by any
Originator or the Seller of any representation, warranty or covenant under
each Mortgage Loan Purchase Agreement, the Letter Agreement, or this
Agreement, as applicable, in respect of any Mortgage Loan which materially
adversely affects
54
the value of such Mortgage Loan or the interest therein of the
Certificateholders (in the case of any such representation or warranty made in
each Mortgage Loan Purchase Agreement, the Letter Agreement, or this
Agreement, as applicable, to the knowledge or the best of knowledge of such
Originator or the Seller as to which such Originator or the Seller has no
knowledge, without regard to the Originator's or the Seller's lack of
knowledge with respect to the substance of such representation or warranty
being inaccurate at the time it was made), the Trustee shall promptly notify
the Seller and the Servicer of such defect, missing document or breach and
cause such Originator or Seller, as applicable, to deliver such missing
document or cure such defect or breach within 90 days from the date the
Originator or Seller, as applicable, was notified of such missing document,
defect or breach; provided that such missing document was not previously
delivered by the Originator under the applicable Mortgage Loan Purchase
Agreement. If such Originator or the Seller, as the case may be, does not
deliver such missing document or cure such defect or breach in all material
respects during such period, the Trustee shall enforce the obligations of such
Originator or the Seller, as applicable, under the related Mortgage Loan
Purchase Agreement, the Letter Agreement or this Agreement, as the case may
be, to repurchase such Mortgage Loan from the Trust Fund at the Purchase Price
within 90 days after the date on which such Originator or the Seller, as
applicable, was notified (subject to Section 2.03(d)) of such missing
document, defect or breach, if and to the extent that such Originator or the
Seller, as applicable, is obligated to do so under the related Mortgage Loan
Purchase Agreement, the Letter Agreement or this Agreement, as applicable. In
the event that the Originator or the Seller, as the case may be, shall fail to
cure the applicable breach or repurchase a Mortgage Loan in accordance with
the preceding sentence, the Depositor shall do so. The Purchase Price for the
repurchased Mortgage Loan shall be deposited in the Distribution Account, and
the Trustee, upon receipt of such deposit, shall release or cause the
Custodian to release to such Originator or the Seller, as applicable, the
related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as such
Originator or the Seller, as applicable, shall furnish to it and as shall be
necessary to vest in such Originator or the Seller, as the case may be, any
Mortgage Loan released pursuant hereto, and the Trustee shall have no further
responsibility with regard to such Mortgage File. In lieu of repurchasing any
such Mortgage Loan as provided above, if so provided in the related Mortgage
Loan Purchase Agreement, the Letter Agreement or this Agreement, as
applicable, the related Originator, the Seller or the Depositor, as
applicable, may cause such Mortgage Loan to be removed from the Trust Fund (in
which case it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans in the manner and subject to the
limitations set forth in Section 2.03(c). It is understood and agreed that the
obligation of the related Originator, the Seller or the Depositor, as
applicable, to cure or to repurchase (or to substitute for) any Mortgage Loan
as to which a document is missing, a material defect in a constituent document
exists or as to which such a breach has occurred and is continuing shall
constitute the sole remedy respecting such omission, defect or breach
available to the Trustee on behalf of the Certificateholders.
(b) (i) As promptly as practicable (and no later than 90
days) after the earlier of discovery by the Servicer or receipt of notice by
the Servicer of the breach of any representation, warranty or covenant of the
Servicer set forth in Section 2.05 which materially and adversely affects the
interests of the Certificateholders in any Mortgage Loan, the Servicer shall
cure such breach in all material respects.
55
(ii) Within 90 days of the earlier of discovery by the Servicer or
receipt of notice by the Servicer of the breach of any representation,
warranty or covenant of the Servicer set forth in Section 2.05 which
materially and adversely affects the interests of the Holders of the Class P
Certificates to any Prepayment Charge, the Servicer shall cure such breach in
all material respects. If the covenant made by the Servicer in Section
2.05(viii) is breached, the Servicer must pay into the Collection Account the
amount of the waived Prepayment Charge.
(c) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.03(a) must be effected
prior to the date which is two years after the Closing Date for the Trust
Fund.
As to any Deleted Mortgage Loan for which an Originator, the
Seller or the Depositor substitutes a Qualified Substitute Mortgage Loan or
Loans, such substitution shall be effected by such Originator, the Seller or
the Depositor, as the case may be, delivering to the Custodian on behalf of
the Trustee, for such Qualified Substitute Mortgage Loan or Loans, the
Mortgage Note, the Mortgage, the Assignment to the Trustee, and such other
documents and agreements, with all necessary endorsements thereon, as are
required by Section 2.01, together with an Officers' Certificate providing
that each such Qualified Substitute Mortgage Loan satisfies the definition
thereof and specifying the Substitution Shortfall Amount (as described below),
if any, in connection with such substitution. The Trustee or the Custodian
shall acknowledge receipt for such Qualified Substitute Mortgage Loan or Loans
and, within ten Business Days thereafter, review such documents as specified
in Section 2.02 and deliver to the Trustee, the Depositor and the Servicer,
with respect to such Qualified Substitute Mortgage Loan or Loans, a
certification substantially in the form attached hereto as Exhibit C-1, with
any applicable exceptions noted thereon. Within one year of the date of
substitution, the Trustee or the Custodian shall deliver to the Depositor and
the Servicer a certification substantially in the form of Exhibit C-2 hereto
with respect to such Qualified Substitute Mortgage Loan or Loans, with any
applicable exceptions noted thereon. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of substitution are not part
of the Trust Fund and will be retained by the related Originator, the Seller
or the Depositor, as the case may be. For the month of substitution,
distributions to Certificateholders will reflect the Monthly Payment due on
such Deleted Mortgage Loan on or before the Due Date in the month of
substitution, and the related Originator, the Seller or the Depositor, as the
case may be, shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. The Depositor shall give or
cause to be given written notice to the Certificateholders that such
substitution has taken place, shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage Loan or
Loans and shall deliver a copy of such amended Mortgage Loan Schedule to the
Trustee. Upon such substitution, such Qualified Substitute Mortgage Loan or
Loans shall constitute part of the Mortgage Pool and shall be subject in all
respects to the terms of this Agreement, including, in the case of a
substitution effected by an Originator, all applicable representations and
warranties thereof included in the related Mortgage Loan Purchase Agreement,
and in the case of a substitution effected by the Depositor, all applicable
representations and warranties thereof set forth in Section 2.04, and in the
case of a substitution effected by the Seller, all applicable representations
and warranties thereof included in the Letter Agreement and in Exhibit B of
this Agreement, in each case as of the date of substitution.
56
For any month in which an Originator, the Seller or the
Depositor substitutes one or more Qualified Substitute Mortgage Loans for one
or more Deleted Mortgage Loans, the Servicer will determine the amount (the
"Substitution Shortfall Amount"), if any, by which the aggregate Purchase
Price of all such Deleted Mortgage Loans exceeds the aggregate of, as to each
such Qualified Substitute Mortgage Loan, the Stated Principal Balance thereof
as of the date of substitution, together with one month's interest on such
Stated Principal Balance at the applicable Net Mortgage Rate, plus all
outstanding P&I Advances and Servicing Advances. On the date of such
substitution, which shall be on or prior to the next succeeding Determination
Date, the related Originator, the Seller or the Depositor, as the case may be,
will deliver or cause to be delivered to the Servicer for deposit in the
Collection Account an amount equal to the Substitution Shortfall Amount, if
any, and the Trustee, upon receipt of the related Qualified Substitute
Mortgage Loan or Loans and certification by the Servicer of such deposit,
shall release to the related Originator, the Depositor or the Seller, as the
case may be, the related Mortgage File or Files and the Trustee shall execute
and deliver such instruments of transfer or assignment, in each case without
recourse, as the related Originator, the Depositor or the Seller, as the case
may be, shall deliver to it and as shall be necessary to vest therein any
Deleted Mortgage Loan released pursuant hereto.
In addition, the related Originator, the Depositor or the
Seller, as the case may be, shall obtain at its own expense and deliver to the
Trustee an Opinion of Counsel to the effect that such substitution will not
cause (a) any federal tax to be imposed on any of the REMICs, created
hereunder, 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 REMIC hereunder to fail to qualify as a REMIC at any time that any
Certificate is outstanding.
(d) Upon discovery by the Depositor, the Seller, the
Servicer, or the Trustee that any Mortgage Loan does not constitute a
"qualified mortgage" within the meaning of Section 860G(a)(3) of the Code, the
party discovering such fact shall within two Business Days give written notice
thereof to the other parties. In connection therewith, the related Originator,
the Seller or the Depositor, as the case may be shall repurchase or, subject
to the limitations set forth in Section 2.03(c), substitute one or more
Qualified Substitute Mortgage Loans for the affected Mortgage Loan within 90
days of the earlier of discovery or receipt of such notice with respect to
such affected Mortgage Loan. The Depositor shall cause such repurchase or
substitution to be made by (i) the related Originator, if the affected
Mortgage Loan's status as a non-qualified mortgage is or results from a breach
of any representation, warranty or covenant made by the related Originator
under the applicable Mortgage Loan Purchase Agreement, (ii) the Seller, if the
affected Mortgage Loan's status as a non-qualified mortgage is or results from
a breach of any representation, warranty or covenant made by the Seller under
the Letter Agreement or this Agreement, or (iii) the Depositor, if the
affected Mortgage Loan's status as a non-qualified mortgage is a breach of any
representation or warranty of the Depositor set forth in Section 2.04, or if
its status as a non-qualified mortgage is a breach of any representation or
warranty. Any such repurchase or substitution shall be made in the same manner
as set forth in Section 2.03(a). The Trustee shall reconvey to the related
Originator, the Seller or the Depositor, as the case may be, the Mortgage Loan
to be released pursuant hereto in the same manner, and on the same terms and
conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty.
57
SECTION 2.04. Representations and Warranties of the
Depositor.
The Depositor hereby represents, warrants and covenants to
the Trustee that as of the Closing Date:
(i) The Depositor is a corporation duly formed and
validly existing under the laws governing its creation and
existence, is in compliance with the laws of each state in
which any Mortgaged Property or the Depositor is located or
doing business and is in good standing in each jurisdiction
in which the nature of its business, or the properties owned
or leased by it make such qualification necessary. The
Depositor has all requisite authority to own and operate its
properties, to carry out its business as presently conducted
and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other
Operative Documents to which it is a party.
(ii) The execution and delivery of this Agreement and
the other Operative Documents to which it is a party by the
Depositor and its performance and compliance with the terms
of this Agreement and the other Operative Documents to which
it is a party have been duly authorized by all necessary
corporate action on the part of the Depositor and will not
violate the Depositor's Charter 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 a
breach of, any material contract, agreement or other
instrument to which the Depositor is a party or by which the
Depositor is bound or violate any statute or any order, rule
or regulation of any court, governmental agency or body or
other tribunal having jurisdiction over the Depositor or any
of its properties.
(iii) This Agreement and the other Operative Documents
to which the Depositor is a party, assuming due
authorization, execution and delivery by the other parties
hereto and thereto, each constitutes a valid, legal and
binding obligation of the Depositor, enforceable against it
in accordance with the terms hereof and thereof, except as
the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by
general principles of equity (whether considered in a
proceeding or action in equity or at law).
(iv) The Depositor is not in default with respect to
any order or decree of any court or any order, regulation or
demand of any federal, state, municipal or governmental
agency, which default could materially and adversely affect
the condition (financial or other) or operations of the
Depositor or its properties or the consequences of which
could materially and adversely affect its performance
hereunder and under the other Operative Documents to which
the Depositor is a party.
(v) No litigation, proceeding or investigation is
pending with respect to which the Depositor has received
service of process or, to the best of the Depositor's
knowledge, threatened against the Depositor which
litigation,
58
proceeding or investigation might have consequences that
would prohibit its entering into this Agreement or any other
Operative Documents to which it is a party or that would
materially and adversely affect the condition (financial or
otherwise) or operations of the Depositor or its properties
or might have consequences that would materially and
adversely affect the validity or enforceability of the
Mortgage Loans or the Depositor's performance hereunder and
under the other Operative Documents to which the Depositor
is a party.
(vi) [reserved].
(vii) Immediately prior to the sale and assignment by
the Depositor to the Trustee on behalf of the Trust Fund of
each Mortgage Loan, the Depositor had good and equitable
title to each Mortgage Loan subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge,
charge or other encumbrance or other interest of any nature.
(viii) As of the Closing Date, the Depositor has
transferred all right, title and interest in the Initial
Mortage Loans to the Trustee on behalf of the Trust Fund.
(ix) The Depositor is solvent and will not be made
insolvent by the transfer of the Mortgage Loans, and the
Depositor is not aware of any impending insolvency. The
Depositor has not transferred the Mortgage Loans to the
Trustee on behalf of the Trust Fund with any intent to
hinder, delay or defraud any of its creditors.
(x) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits,
authorizations, rights and licenses required to be taken,
given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency
(other than any such actions, approvals, etc. under any
state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such
representation or warranty), that are necessary or advisable
in connection with the purchase and sale of the Certificates
and the execution and delivery by the Depositor of the
Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full
force and effect on the date hereof, are not subject to any
pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal
therefrom may be taken or review thereof may be obtained has
expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this
Agreement and the other Operative Documents on the part of
the Depositor and the performance by the Depositor of its
obligations under this Agreement and such of the other
Operative Documents to which it is a party.
(xi) The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Depositor hereunder
are not subject to the bulk transfer laws of any similar
statutory provisions in effect in any applicable
jurisdiction.
59
(xii) [reserved].
SECTION 2.05. Representations, Warranties and Covenants of
the Servicer and the Seller.
(a) The Servicer hereby represents, warrants and covenants
to the Trustee, the Certificateholders and to the Depositor that as of the
Closing Date or as of such date specifically provided herein:
(i) The Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the
state of its incorporation and is duly authorized and
qualified to transact any and all business contemplated by
this Agreement to be conducted by the Servicer in any state
in which a Mortgaged Property related to a Mortgage Loan is
located or is otherwise not required under applicable law to
effect such qualification and, in any event, is in
compliance with the doing business laws of any such State,
to the extent necessary to ensure its ability to enforce
each Mortgage Loan serviced and to service the Mortgage
Loans in accordance with the terms of this Agreement;
(ii) The Servicer has the full power and authority to
service each Mortgage Loan which the Servicer is required to
service hereunder, and to execute, deliver and perform, and
to enter into and consummate the transactions contemplated
by this Agreement and has duly authorized by all necessary
action on the part of the Servicer the execution, delivery
and performance of this Agreement; and this Agreement,
assuming the due authorization, execution and delivery
thereof by the Depositor and the Trustee, constitutes a
legal, valid and binding obligation of the Servicer,
enforceable against the Servicer in accordance with its
terms, except to the extent that (a) the enforceability
thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor
may be brought;
(iii) The execution and delivery of this Agreement by
the Servicer, the servicing of the Mortgage Loans by the
Servicer hereunder, the consummation by the Servicer of any
other of the transactions herein contemplated, and the
fulfillment of or compliance with the terms hereof are in
the ordinary course of business of the Servicer and will not
(A) result in a breach of any term or provision of the
organizational documents of the Servicer or (B) conflict
with, result in a breach, violation or acceleration of, or
result in a default under, the terms of any other material
agreement or instrument to which the Servicer is a party or
by which it may be bound, or any statute, order or
regulation applicable to the Servicer of any court,
regulatory body, administrative agency or governmental body
having
60
jurisdiction over the Servicer; and the Servicer is
not a party to, bound by, or in breach or violation of any
indenture or other agreement or instrument, or subject to or
in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or
governmental body having jurisdiction over it, which
materially and adversely affects or, to the Servicer's
knowledge, would in the future materially and adversely
affect, (x) the ability of the Servicer to perform its
obligations under this Agreement or (y) the business,
operations, financial condition, properties or assets of the
Servicer taken as a whole;
(iv) The Servicer is an approved seller/servicer for
Xxxxxx Xxx and an approved servicer for Xxxxxxx Mac in good
standing and is a HUD approved non-supervised mortgagee
pursuant to Section 203 and Section 211 of the National
Housing Act, and no event has occurred, including but not
limited to a change in insurance coverage, that would make
the Servicer unable to comply with HUD, Xxxxxx Xxx or
Xxxxxxx Mac eligibility requirements or which would require
notification to any of HUD, Xxxxxx Xxx or Xxxxxxx Mac;
(v) No litigation is pending or, to the best knowledge
of the Servicer, threatened against the Servicer that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the
Servicer to service the Mortgage Loans or to perform any of
its other obligations hereunder in accordance with the terms
hereof;
(vi) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
execution, delivery and performance by the Servicer of, or
compliance by the Servicer with, this Agreement or the
consummation by the Servicer of the transactions
contemplated by this Agreement, except for such consents,
approvals, authorizations or orders, if any, that have been
obtained prior to the Closing Date; and
(vii) [reserved].
(viii) The Servicer will not waive any Prepayment
Charge or part of a Prepayment Charge unless such waiver
would maximize recovery of total proceeds taking into
account the value of such Prepayment Charge and related
Mortgage Loan and doing so is standard and customary in
servicing mortgage loans similar to the Mortgage Loans
(including any waiver of a Prepayment Charge in connection
with a refinancing of a Mortgage Loan that is related to a
default or an imminent default), and in no event will it
waive a Prepayment Charge in connection with a refinancing
of a Mortgage Loan that is not related to a default or an
imminent default. Notwithstanding the previous sentence, if
the Servicer obtains an Opinion of Counsel opining that any
Prepayment Charge is not legally enforceable under the
circumstances in which the related Principal Prepayment
occurs, then the Servicer shall not be required to attempt
to collect the applicable Prepayment Charge, and shall have
no liability or obligation with respect to such Prepayment
Charge pursuant to Section 2.03(b)(ii) hereof.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive delivery
of the Mortgage Files to the Trustee, and shall inure to the benefit of the
Trustee, the Depositor and the Certificateholders. Upon discovery by
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any of the Depositor, the Servicer or the Trustee of a breach of any of the
foregoing representations, warranties and covenants which materially and
adversely affects the value of any Mortgage Loan, Prepayment Charge or the
interests therein of the Certificateholders, the party discovering such breach
shall give prompt written notice (but in no event later than two Business Days
following such discovery) to the Trustee. The obligation of the Servicer set
forth in Section 2.03(b) to cure breaches (or, in the case of Section
2.05(viii), to pay the amount of the waived Prepayment Charge) shall
constitute the sole remedy against the Servicer available to the
Certificateholders, the Depositor or the Trustee on behalf of the
Certificateholders respecting a breach of the representations, warranties and
covenants contained in this Section 2.05.
(b) The Seller hereby represents, warrants and covenants to
the Trustee, the Certificateholders and to the Depositor that as of the
Closing Date or as of such date specifically provided herein:
(i) the Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation;
(ii) the Seller has full corporate power to own its
property, to carry on its business as presently conducted and to
enter into and perform its obligations under this Agreement;
(iii) the execution and delivery by the Seller of this
Agreement have been duly authorized by all necessary corporate action
on the part of the Seller; and neither the execution and delivery of
this Agreement, nor the consummation of the transactions herein
contemplated hereby, nor compliance with the provisions hereof, will
conflict with or result in a breach of, or constitute a default
under, any of the provisions of any law, governmental rule,
regulation, judgment, decree or order binding on the Seller or its
properties or the certificate of incorporation or by-laws of the
Seller, except those conflicts, breaches or defaults which would not
reasonably be expected to have a material adverse effect on the
Seller's ability to enter into this Agreement and to consummate the
transactions contemplated hereby;
(iv) the execution, delivery and performance by the Seller
of this Agreement and the consummation of the transactions
contemplated hereby do not require the consent or approval of, the
giving of notice to, the registration with, or the taking of any
other action in respect of, any state, federal or other governmental
authority or agency, except those consents, approvals, notices,
registrations or other actions as have already been obtained, given
or made and, in connection with the recordation of the Mortgage
Loans, powers of attorney or assignments of of the Mortgages not yet
completed;
(v) this Agreement has been duly executed and delivered by
the Seller and, assuming due authorization, execution and delivery by
the Trustee, the Servicer and the Depositor, constitutes a valid and
binding obligation of the Seller enforceable against it in accordance
with its terms (subject to applicable bankruptcy and insolvency laws
and other similar laws affecting the enforcement of the rights of
creditors generally); and
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(vi) to the knowledge of the Seller, there are no actions,
litigation, suits or proceedings pending or threatened against the
Seller before or by any court, administrative agency, arbitrator or
governmental body (i) with respect to any of the transactions
contemplated by this Agreement or (ii) with respect to any other
matter which in the judgment of the Seller if determined adversely to
the Seller would reasonably be expected to materially and adversely
affect the Seller's ability to perform its obligations under this
Agreement; and the Seller is not in default with respect to any order
of any court, administrative agency, arbitrator or governmental body
so as to materially and adversely affect the transactions
contemplated by this Agreement.
(c) The Seller hereby makes the representations and
warranties set forth on Exhibit B to the Trustee and the Depositor, as of the
Closing Date, with respect to the DLJMC Mortgage Loans.
SECTION 2.06. Issuance of Class R-I Certificates.
The Trustee acknowledges the assignment to it of the Initial
Mortgage Loans and the delivery to the Custodian on its behalf of the Mortgage
Files, subject to the provisions of Section 2.01 and Section 2.02, together
with the assignment to the Trustee of all other assets included in REMIC I,
receipt of which is hereby acknowledged. Concurrently with such assignment and
delivery and in exchange therefor, the Trustee, pursuant to the written
request of the Depositor executed by an officer of the Depositor, has
executed, authenticated and delivered to or upon the order of the Depositor,
the Class R-I Certificates in authorized denominations. The interests
evidenced by the Class R-I Certificates, together with the REMIC I Regular
Interests, constitute the entire beneficial ownership interest in REMIC I.
SECTION 2.07. Conveyance of REMIC I Regular Interests;
Acceptance of REMIC II by the Trustee.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests for the benefit of the Class R-II and
REMIC III Certificateholders. The Trustee acknowledges receipt of the REMIC I
Regular Interests and declares that it holds and will hold the same in trust
for the exclusive use and benefit of REMIC II.
SECTION 2.08. Conveyance of REMIC II Regular Interests;
Acceptance of REMIC III by the Trustee.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC II Regular Interests for the benefit of the REMIC III Regular
Interests and Class R-III Residual Interest. The Trustee acknowledges receipt
of the REMIC II Regular Interests and declares that it holds and will hold the
same in trust for the exclusive use and benefit of REMIC III.
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SECTION 2.09. Conveyance of the REMIC III Regular Interest;
Acceptance of the REMIC IV by the Trustee.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC III Regular Interests for the benefit of the REMIC IV Regular
Interests. The Trustee acknowledges receipt of the REMIC III Regular Interests
and declares that it holds and will hold the same in trust for the exclusive
use and benefit of REMIC IV.
SECTION 2.10. Conveyance of REMIC IV Regular Interests;
Acceptance of REMIC V by the Trustee.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC IV Regular Interests for the benefit of the Class R-V and
REMIC V Regular Interests. The Trustee acknowledges receipt of the REMIC IV
Regular Interests and declares that it holds and will hold the same in trust
for the exclusive use and benefit REMIC IV.
SECTION 2.11. Conveyance of REMIC IV Regular Interests;
Acceptance of REMIC V by the Trustee.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC IV Regular Interests for the benefit of the Class R-V and the
Regular Certificateholders. The Trustee acknowledges receipt of the REMIC IV
Regular Interests and declares that it holds and will hold the same in trust
for the exclusive use and benefit REMIC V.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.01. Servicer to Act as Servicer.
The Servicer shall service and administer the Mortgage Loans
on behalf of the Trust Fund and in the best interests of and for the benefit
of the Certificateholders (as determined by the Servicer in accordance with
Accepted Servicing Practices) in accordance with the terms of this Agreement
and the Mortgage Loans and, to the extent consistent with such terms, in the
same manner in which it services and administers similar mortgage loans for
its own portfolio, giving due consideration to customary and usual standards
of practice of mortgage lenders and loan servicers administering similar
mortgage loans but without regard to:
(i) any relationship that the Servicer, any related
Sub-Servicer or any Affiliate of the Servicer or any
related Sub-Servicer may have with the related Mortgagor;
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(ii) the ownership or non-ownership of any Certificate
by the Servicer or any Affiliate of the Servicer;
(iii) the Servicer's obligation to make P&I Advances or
Servicing Advances; or
(iv) the Servicer's or any related Sub-Servicer's
right to receive compensation for its services hereunder or
with respect to any particular transaction.
To the extent consistent with the foregoing, the Servicer shall seek to
maximize the timely and complete recovery of principal and interest on the
Mortgage Notes. Subject only to the above-described servicing standards and
the terms of this Agreement and of the respective Mortgage Loans, the Servicer
shall have full power and authority, acting alone or through a Sub-Servicer as
provided in Section 3.02, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary
or desirable. Without limiting the generality of the foregoing, the Servicer
in its own name or in the name of a Sub-Servicer is hereby authorized and
empowered by the Trustee when the Servicer believes it appropriate in its best
judgment in accordance with the servicing standards set forth above, to
execute and deliver, on behalf of the Certificateholders and the Trust Fund,
and upon notice to the Trustee, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Mortgage Loans and the Mortgaged
Properties and to institute foreclosure proceedings or obtain a deed-in-lieu
of foreclosure so as to convert the ownership of such properties, and to hold
or cause to be held title to such properties, on behalf of the Trust Fund and
Certificateholders. The Servicer shall service and administer the Mortgage
Loans in accordance with applicable law and shall provide to the Mortgagors
any reports required to be provided to them thereby. The Servicer shall also
comply in the performance of this Agreement with all reasonable rules and
requirements of each insurer under any standard hazard insurance policy.
Within fifteen (15) days of the Closing Date, but subject to Section 3.17, the
Trustee shall execute and furnish to the Servicer and any Sub-Servicer such
documents as are necessary or appropriate to enable the Servicer or any
Sub-Servicer to carry out their servicing and administrative duties hereunder,
and the Trustee hereby grants to the Servicer a special or limited power of
attorney to carry out such duties including a power of attorney for each
county in which a related Mortgaged Property is located to enable the Servicer
to take title to related Mortgaged Properties after foreclosure on behalf of
the Trustee and the Certificateholders. The Trustee shall execute a separate
power of attorney in favor of the Servicer to the extent furnished to the
Trustee by the Servicer for the purposes described herein to the extent
necessary or desirable to enable the Servicer to perform its duties hereunder.
The Trustee shall not be liable for the actions of the Servicer or any
Sub-Servicer under such powers of attorney.
Subject to Section 3.09 hereof, in accordance with the
standards of the preceding paragraph, the Servicer shall advance or cause to
be advanced funds as necessary for the purpose of effecting the timely payment
of taxes and assessments on the Mortgaged Properties, which advances shall be
Servicing Advances reimbursable in the first instance from related collections
from the Mortgagors pursuant to Section 3.09, and further as provided in
Section 3.11. Any cost incurred by the Servicer or by a Sub-Servicer in
effecting the timely payment of taxes and
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assessments on a Mortgaged Property shall not, for the purpose of calculating
distributions to Certificateholders, be added to the unpaid principal balance
of the related Mortgage Loan, notwithstanding that the terms of such Mortgage
Loan so permit.
Notwithstanding anything in this Agreement to the contrary,
the Servicer may not make any future advances with respect to a related
Mortgage Loan (except as provided in Section 4.03) nor shall the Servicer (i)
permit any modification with respect to any related Mortgage Loan that would
change the related Mortgage Rate, reduce or increase the principal balance
(except for reductions resulting from actual payments of principal) or change
the final maturity date on such Mortgage Loan (unless, as provided in Section
3.07, the related Mortgagor is in default with respect to such Mortgage Loan
or such default is, in the judgment of the Servicer, reasonably foreseeable)
or (ii) permit any modification, waiver or amendment of any term of any
related Mortgage Loan that would both (A) effect an exchange or reissuance of
such Mortgage Loan under Section 1001 of the Code (or final, temporary or
proposed Treasury regulations promulgated thereunder) and (B) cause any REMIC
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 Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release the
Servicer from the responsibilities or liabilities arising under this
Agreement.
SECTION 3.02. Sub-Servicing Agreements Between the Servicer
and Sub-Servicers.
(a) The Servicer may enter into Sub-Servicing Agreements
(provided that such agreements would not result in a withdrawal or a
downgrading by any Rating Agency of the ratings on any Class of Certificates,
as evidenced by a letter to that effect delivered by each Rating Agency to the
Depositor and the Trustee) with one or more Sub-Servicers, for the servicing
and administration of the related Mortgage Loans. The Trustee is hereby
authorized to acknowledge, at the request of the Servicer, any Sub-Servicing
Agreement that meets the requirements applicable to Sub-Servicing Agreements
set forth in this Agreement and that is otherwise permitted under this
Agreement.
Each Sub-Servicer shall be (i) 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 such Sub-Servicer to perform its obligations hereunder and under the
related Sub-Servicing Agreement, (ii) an institution approved as a mortgage
loan originator by the Federal Housing Administration or an institution the
deposit accounts in which are insured by the FDIC and (iii) a Xxxxxxx Mac or
Xxxxxx Mae approved mortgage servicer. Each Sub-Servicing Agreement must
impose on the related Sub-Servicer requirements conforming to the provisions
set forth in Section 3.08 and provide for servicing of the related Mortgage
Loans consistent with the terms of this Agreement. The Servicer will examine
each Sub-Servicing Agreement to which the Servicer is a party and will be
familiar with the terms thereof. The terms of any Sub-Servicing Agreement will
not be inconsistent with any of the provisions of this Agreement. The Servicer
and Sub-Servicer may enter into and make amendments to the applicable
Sub-Servicing Agreement or enter into different forms of Sub-
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Servicing Agreements; provided, however, that any such amendments or different
forms shall be consistent with and not violate the provisions of this
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 66% of the Voting Rights. Any variation
without the consent of the Holders of Certificates entitled to at least 66% of
the Voting Rights from the provisions set forth in Section 3.08 relating to
insurance or priority requirements of Sub-Servicing Accounts, or credits and
charges to the Sub-Servicing Accounts or the timing and amount of remittances
by the a Sub-Servicer to the Servicer, are conclusively deemed to be
inconsistent with this Agreement and therefore prohibited. The Servicer shall
deliver to the Trustee copies of all Sub-Servicing Agreements, and any
amendments or modifications thereof, promptly upon the Servicer's execution
and delivery of such instruments.
(b) As part of its servicing activities hereunder, the
Servicer (except as otherwise provided in the last sentence of this
paragraph), for the benefit of the Trust Fund and the Certificateholders,
shall enforce the obligations of each Sub-Servicer servicing the related
Mortgage Loans under the related Sub-Servicing Agreement, including, without
limitation, any obligation to make advances in respect of Delinquent payments
as required by the applicable 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
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans. The Servicer, as applicable, shall pay the
costs of such enforcement at its own expense, and shall be reimbursed therefor
only (i) from a general recovery resulting from such enforcement, to the
extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loans 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 Servicer shall be entitled to terminate any
Sub-Servicing Agreement and the rights and obligations of any Sub-Servicer
pursuant to the related Sub-Servicing Agreement in accordance 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 Servicer without any act or deed on the part of
such Sub-Servicer or the Servicer, and the 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.
Any Sub-Servicing Agreement shall include the provision that
such agreement may be immediately terminated by the Trustee without fee, in
accordance with the terms of this Agreement, in the event that the Servicer
shall, for any reason, no longer be the Servicer (including termination due to
a Servicer Event of Default).
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SECTION 3.04. Liability of the Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between
the Servicer and a Sub-Servicer or reference to actions taken through a
Sub-Servicer or otherwise, the Servicer shall remain obligated and primarily
liable to the Trust Fund and the Certificateholders for the servicing and
administering of the related Mortgage Loans in accordance with the provisions
of Section 3.01 without diminution of such obligation or liability by virtue
of such Sub-Servicing Agreements or arrangements or by virtue of
indemnification from the related Sub-Servicer and to the same extent and under
the same terms and conditions as if the Servicer alone were servicing and
administering the related Mortgage Loans. The Servicer shall be entitled to
enter into any agreement with a Sub-Servicer for indemnification of the
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 shall be deemed to be between the related
Sub-Servicer and the 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 related Sub-Servicer
except as set forth in Section 3.06. The Servicer shall be solely liable for
all fees owed by it to any related Sub-Servicer, irrespective of whether the
Servicer's compensation pursuant to this Agreement is sufficient to pay such
fees.
SECTION 3.06. Assumption or Termination of Sub-Servicing
Agreements by Trustee.
In the event that the Servicer shall for any reason no
longer be the Servicer (including by reason of the occurrence of a Servicer
Event of Default), the Trustee or its designee shall thereupon assume all of
the rights and obligations of the Servicer subject to Section 7.02 under each
Sub-Servicing Agreement that the Servicer may have entered into, unless the
Trustee elects to terminate any Sub-Servicing Agreement in accordance with its
terms as provided in Section 3.03. Upon such assumption, the Trustee, its
designee or the successor servicer for the Trustee appointed pursuant to
Section 7.02 shall be deemed, subject to Section 3.03, to have assumed all of
the Servicer's interest therein and to have replaced the Servicer as a party
to each Sub-Servicing Agreement to the same extent as if each Sub-Servicing
Agreement had been assigned to the assuming party, except that (i) the
Servicer shall not thereby be relieved of any liability or obligations under
any related Sub-Servicing Agreement that arose before it ceased to be the
Servicer and (ii) none of the Trustee, its designee or any successor servicer
shall be deemed to have assumed any liability or obligation of the Servicer
that arose before it ceased to be the Servicer.
The Servicer at its expense shall, upon request of the
Trustee, deliver to the assuming party all documents and records relating to
each Sub-Servicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by or on
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behalf of it, and otherwise use its best efforts to effect the orderly and
efficient transfer of the related Sub-Servicing Agreements to the assuming
party.
SECTION 3.07. Collection of Certain Mortgage Loan Payments.
The 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 applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Servicer may in its discretion (i) waive any late payment
charge or, if applicable, any penalty interest, or (ii) extend the due dates
for the Monthly Payments due on a Mortgage Note for a period of not greater
than 180 days; provided that any extension pursuant to clause (ii) above shall
not affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, the Servicer shall make timely P&I
Advances on such Mortgage Loan during such extension pursuant to Section 4.03
and in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements, subject to Section
4.03(d) pursuant to which the Servicer shall not be required to make any such
P&I Advances that are Nonrecoverable P&I Advances. Notwithstanding the
foregoing, in the event that a Mortgage Loan is in default or, in the judgment
of the Servicer, such default is reasonably foreseeable, the Servicer,
consistent with the standards set forth in Section 3.01, may also waive,
modify or vary any term of such Mortgage Loan (including modifications that
would change the related Mortgage Rate, forgive the payment of principal or
interest or extend the final maturity date of such Mortgage Loan), accept
payment from the related Mortgagor of an amount less than the Stated Principal
Balance in final satisfaction of such Mortgage Loan (such payment, a "Short
Pay-off") or consent to the postponement of strict compliance with any such
term or otherwise grant indulgence to any related Mortgagor.
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 related Sub-Servicer will be
required to establish and maintain one or more accounts (each such account or
accounts, a "Sub-Servicing Account"). Each Sub-Servicing Account shall be an
Eligible Account. Each Sub-Servicer shall deposit in the clearing account
(which account must be an Eligible Account) in which it customarily deposits
payments and collections on mortgage loans in connection with its mortgage
loan servicing activities on a daily basis, and in no event more than one
Business Day after such Sub-Servicer's receipt thereof, all proceeds of the
related Mortgage Loans received by such Sub-Servicer less its servicing
compensation to the extent permitted by the related Sub-Servicing Agreement,
and shall thereafter deposit such amounts in the related Sub-Servicing
Account, in no event more than two Business Days after the deposit of such
funds into the clearing account. Each Sub-Servicer shall thereafter deposit
such proceeds in the Collection Account or remit such proceeds to the Servicer
for deposit in the Collection Account not later than two Business Days after
the deposit of such amounts in the related Sub-Servicing Account. For purposes
of this Agreement, the Servicer shall be deemed to have received payments on
the related Mortgage Loans when the related Sub-Servicer receives such
payments.
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SECTION 3.09. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts.
The Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts (each such account or
accounts, a "Servicing Account"). The Servicing Accounts shall be Eligible
Accounts. The Servicer shall deposit in the clearing account (which account
must be an Eligible Account) in which it customarily deposits payments and
collections on mortgage loans in connection with its mortgage loan servicing
activities on a daily basis, and in no event more than one Business Day after
the Servicer's receipt thereof, all collections from the Mortgagors (or
related advances from a related Sub-Servicer) for the payment of taxes,
assessments, hazard insurance premiums and comparable items for the account of
the Mortgagors ("Escrow Payments") collected on account of the Mortgage Loans
and shall thereafter deposit such Escrow Payments in the related Servicing
Accounts, in no event more than two Business Days after the deposit of good
funds in the clearing account, for the purpose of effecting the payment of any
such items as required under the terms of this Agreement. Withdrawals of
amounts from a Servicing Account may be made only to (i) effect payment of
taxes, assessments, hazard insurance premiums, and comparable items; (ii)
reimburse the Servicer (or a Sub-Servicer to the extent provided in the
related Sub-Servicing Agreement) out of related collections for any advances
made pursuant to Section 3.01 (with respect to taxes and assessments) and
Section 3.14 (with respect to hazard insurance); (iii) refund to Mortgagors
any sums as may be determined to be overages; (iv) pay interest, if required
and as described below, to Mortgagors on balances in the Servicing Account;
(v) clear and terminate the Servicing Account at the termination of the
Servicer's obligations and responsibilities in respect of the Mortgage Loans
under this Agreement in accordance with Article IX or (vi) recover amounts
deposited in error. As part of its servicing duties, the Servicer or
Sub-Servicer shall pay to the Mortgagors interest on funds in the Servicing
Accounts, to the extent required by law and, to the extent that interest
earned on funds in the Servicing Accounts is insufficient, to pay such
interest from its or their own funds, without any reimbursement therefor. The
Servicer will be responsible for the administration of the Servicing Accounts
and will be obligated to make Servicing Advances to the Servicing Account in
respect of its obligations under this Section 3.09, reimbursable from the
Servicing Accounts or Collection Account, when and as necessary to avoid the
lapse of insurance coverage on the Mortgaged Property, or which the Servicer
knows, or in the exercise of the required standard of care of the Servicer
hereunder should know, is necessary to avoid the loss of the Mortgaged
Property due to a tax sale or the foreclosure as a result of a tax lien.
SECTION 3.10. Collection Account; Distribution Account and
Pre-Funding Account.
(a) On behalf of the Trust Fund, the Servicer shall
establish and maintain, or cause to be established and maintained, one or more
accounts (each such account or accounts, a "Collection Account"), held in
trust for the benefit of the Trustee and the Certificateholders. On behalf of
the Trust Fund, the Servicer shall deposit or cause to be deposited in the
related clearing account (which account must be an Eligible Account) in which
it customarily deposits payments and collections on mortgage loans in
connection with its mortgage loan servicing activities on a daily basis, and
in no event more than one Business Day after the Servicer's receipt thereof,
and shall thereafter deposit in the Collection Account, in no event more than
two
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Business Days after the deposit of good funds into the clearing account,
as and when received or as otherwise required hereunder, the following
payments and collections received or made by it subsequent to the related
Cut-off Date (other than in respect of principal or interest on the Mortgage
Loans due on or before the related Cut-off Date), or payments (other than
Principal Prepayments) received by it on or prior to the related Cut-off Date
but allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the
Servicing Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds
(other than proceeds collected in respect of any particular
REO Property and amounts paid by the Servicer in connection
with a purchase of the Mortgage Loans and REO Properties
pursuant to Section 9.01);
(iv) any amounts required to be deposited pursuant to
Section 3.12 in connection with any losses realized on
Permitted Investments with respect to funds held in the
Collection Account;
(v) any amounts required to be deposited by the
Servicer pursuant to the second paragraph of Section 3.14(a)
in respect of any blanket policy deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or
purchased in accordance with Section 2.03, Section 3.16(c)
or Section 9.01;
(vii) all Substitution Shortfall Amounts; and
(viii) all Prepayment Charges collected by the Servicer.
For purposes of the immediately preceding sentence, the Cut-off Date with
respect to any Qualified Substitute Mortgage Loan shall be deemed to be the
date of substitution.
The foregoing requirements for deposit in the Collection
Accounts shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late
payment charges, non sufficient funds fees, reconveyance fees, assumption fees
and other similar fees and charges need not be deposited by the Servicer in
the Collection Account and shall, upon collection, belong to the Servicer as
additional compensation for its servicing activities. In the event the
Servicer shall deposit in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding.
(b) On behalf of the Trust Fund, the Trustee shall establish
and maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Trust Fund and the
Certificateholders. On behalf of the Trust Fund, the Servicer shall deliver to
the Trustee in immediately available funds for deposit in the Distribution
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Account on or before 1:00 p.m. New York time (i) on the Servicer Remittance
Date, that portion of the Available Distribution Amount (calculated without
regard to the references in clause (2) of the definition thereof to amounts
that may be withdrawn from the Distribution Account) for the related
Distribution Date then on deposit in the Collection Account, the amount of all
Prepayment Charges on the Mortgage Loans collected by the Servicer in
connection with the voluntary Principal Prepayment in full or in part of any
of the Mortgage Loans then on deposit in the Collection Account (other than
any such Prepayment Charges received after the related Prepayment Period), and
(ii) on each Business Day as of the commencement of which the balance on
deposit in the Collection Account exceeds $75,000 following any withdrawals
pursuant to the next succeeding sentence, the amount of such excess, but only
if the Collection Account constitutes an Eligible Account solely pursuant to
clause (ii) of the definition of "Eligible Account." If the balance on deposit
in the the Collection Account exceeds $75,000 as of the commencement of
business on any Business Day and the Collection Account constitutes an
Eligible Account solely pursuant to clause (ii) of the definition of "Eligible
Account," the Servicer shall, on or before 3:00 p.m. New York time on such
Business Day, withdraw from the Collection Account any and all amounts payable
or reimbursable to itself, the Depositor, the Trustee, the Seller or any
Sub-Servicer pursuant to Section 3.11 and shall pay such amounts to the
Persons entitled thereto. If the Servicer fails to remit to the Trustee for
distribution to the Certificateholders any payment, including any P&I Advance
or Servicing Advance, to be made by the Servicer on the Servicer Remittance
Date (without regard to any grace period), the Servicer shall pay to the
Trustee, for the account of the Trustee, interest on such late remittance at
the Federal Funds Rate from and including the Servicer Remittance Date to but
excluding the related Distribution Date.
(c) Funds in the Collection Account, the Distribution
Account and the Pre-Funding Account may be invested in Permitted Investments
in accordance with the provisions set forth in Section 3.12. The Servicer
shall give notice to the Trustee and the Depositor of the location of the
Collection Account maintained by it when established and prior to any change
thereof. The Trustee shall give notice to the Servicer and the Depositor of
the location of the Distribution Account and the Pre-Funding Account when
established and prior to any change thereof.
(d) Funds held in a Collection Account at any time may be
delivered by the Servicer to the Trustee for deposit in an account (which may
be the Distribution Account and must satisfy the standards for the
Distribution Account as set forth in the definition thereof) and for all
purposes of this Agreement shall be deemed to be a part of such Collection
Account until the Servicer Remittance Date when such amounts are required to
be deposited into the Distribution Account; provided, however, that the
Trustee shall have the sole authority to withdraw any funds held pursuant to
this subsection (d). In the event that the Servicer shall deliver to the
Trustee for deposit in the Distribution Account any amount not required to be
deposited therein, it may at any time request that the Trustee withdraw such
amount from the Distribution Account and remit to it any such amount, any
provision herein to the contrary notwithstanding. In addition, the Servicer
shall deliver to the Trustee from time to time for deposit and in any event
shall remit all such amounts no later than the Servicer Remittance Date, and
the Trustee shall so deposit, in the Distribution Account:
(i) any P&I Advances, as required pursuant to Section
4.03;
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(ii) any amounts required to be deposited pursuant to
Section 3.23(d) or (f) in connection with any REO Property;
(iii) any amounts to be paid by the Servicer in
connection with a purchase of the Mortgage Loans and REO
Properties pursuant to Section 9.01; and
(iv) any related amounts required to be deposited
pursuant to Section 3.24 in connection with any Prepayment
Interest Shortfalls.
(e) The Trustee shall establish and maintain, on behalf of
the Certificateholders, the Pre-Funding Account. On the Closing Date the
Depositor shall remit the Pre-Funded Amount to the Trustee for deposit in the
Pre-Funding Account. The Pre-Funded Amount will be allocated evenly between
Subgroup 1 and Subgroup 2 for the purchase of Subsequent Mortgage Loans for
the related Subgroup. On each Subsequent Transfer Date, upon satisfaction of
the conditions for such Subsequent Transfer Date set forth in Sections 2.01(c)
and (d), the Trustee shall remit to the Depositor the applicable Aggregate
Subsequent Transfer Amount as payment of the purchase price for the related
Subsequent Mortgage Loans.
If any funds remain in the Pre-Funding Account on July15, 2002, to
the extent that they represent earnings on the amounts originally deposited
into the Pre-Funding Account, the Trustee shall distribute them to the order
of the Depositor. The remaining funds shall be transferred to the Distribution
Account to be included as part of principal distributions to the Certificates
on the July 2002 Distribution Date.
SECTION 3.11. Withdrawals from the Collection Account and
Distribution Account.
(a) The Servicer shall, from time to time, make withdrawals
from the Collection Account for any of the following purposes or as described
in Section 4.03:
(i) to remit to the Trustee for deposit in the
Distribution Account the amounts required to be so remitted
pursuant to Section 3.10(b) or permitted to be so remitted
pursuant to the first sentence of Section 3.10(d);
(ii) subject to Section 3.16(d), to reimburse itself
for, without duplication, (a) P&I Advances, but only to the
extent of amounts received which represent Late Collections
(net of the Servicing Fees) of Monthly Payments, Liquidation
Proceeds, condemnation proceeds or Insurance Proceeds on the
Mortgage Loans with respect to which such P&I Advances were
made in accordance with the provisions of Section 4.03 or
(b) any xxxxxxxxxxxx X&X Advances remaining after the final
liquidation of a Mortgage Loan that are Nonrecoverable P&I
Advances not otherwise recoverable to subsection (ii)(a)
hereof;
(iii) subject to Section 3.16(d), to pay itself or any
Sub-Servicer (a) any unpaid Servicing Fees or (b) any
unreimbursed Servicing Advances with respect to each
Mortgage Loan, but only to the extent of any Late
Collections, Liquidation Proceeds, condemnation proceeds,
Insurance Proceeds or other amounts as may be collected by
the Servicer from a Mortgagor, or otherwise
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received with respect to such Mortgage Loan or (c) any
unreimbursed Servicing Advances made remaining after the final
liquidation of a Mortgage Loan that are Nonrecoverable
Servicing Advances, but only to the extent that Late
Collections, Liquidation Proceeds, condemnation proceeds and
Insurance Proceeds received with respect to such Mortgage
Loan are insufficient to reimburse the Servicer or any
related Sub-Servicer for Servicing Advances;
(iv) to pay itself as servicing compensation (in
addition to the Servicing Fee) on the Servicer Remittance
Date any interest or investment income earned on funds
deposited in the Collection Account;
(v) to pay itself, the related Originator, the
Depositor or the Seller, as the case may be, with respect to
each Mortgage Loan that has previously been purchased or
replaced pursuant to Section 2.03 or Section 3.16(c) all
amounts received thereon subsequent to the date of purchase
or substitution, as the case may be;
(vi) to reimburse itself for any P&I Advance or
Servicing Advance previously made which the Servicer has
determined to be a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance in accordance with the
provisions of Section 4.03;
(vii) to reimburse itself or the Depositor for expenses
incurred by or reimbursable to the Servicer or the Depositor,
as the case may be, pursuant to Section 6.03;
(viii) to reimburse itself or the Trustee, as the case
may be, for expenses reasonably incurred in respect of the
breach or defect giving rise to the purchase obligation
under Section 2.03 or Section 2.04 of this Agreement that
were included in the Purchase Price of the Mortgage Loan,
including any expenses arising out of the enforcement of the
purchase obligation;
(ix) to pay, or to reimburse itself for advances in
respect of, expenses incurred in connection with any
Mortgage Loan pursuant to Section 3.16(b);
(x) to withdraw funds deposited in error and to clear
and terminate the Collection Account pursuant to Section
9.01.
The Servicer shall keep and maintain separate accounting, on
a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (v), (vi), (viii) and (ix) above. The
Servicer shall provide written notification to the Trustee on or prior to the
next succeeding Servicer Remittance Date, upon making any withdrawals from the
Collection Account pursuant to subclause (vii) above.
(b) The Trustee shall, from time to time, make withdrawals
from the Distribution Account, for any of the following purposes, without
priority:
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(i) to make distributions to Certificateholders and
the Depositor in accordance with Section 4.01;
(ii) to pay any Extraordinary Trust Fund Expenses;
(iii) [reserved];
(iv) to reimburse itself pursuant to Section 7.01 to
the extent such amounts in Section 7.01 were not reimbursed
by the Servicer;
(v) to pay any amounts in respect of taxes pursuant to
Section 10.01(g)(iii);
(vi) to remit to the Servicer any amount deposited in
the Distribution Account by the Servicer but not required to
be deposited therein in accordance with Section 3.10(d); and
(vii) to clear and terminate the Distribution Account
pursuant to Section 9.01.
SECTION 3.12. Investment of Funds in the Collection Account
and the Distribution Account.
(a) The Servicer may direct any depository institution
maintaining the Collection Account (for purposes of this Section 3.12, an
"Investment Account"), and the Trustee, in its individual capacity, may direct
any depository institution maintaining the Distribution Account (for purposes
of this Section 3.12, also an "Investment Account"), to invest the funds in
such Investment Account in one or more Permitted Investments bearing interest
or sold at a discount, and maturing, unless payable on demand, (i) no later
than 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. All such
Permitted Investments shall be held to maturity, unless payable on demand. Any
investment of funds in an Investment Account shall be made in the name of the
Trustee (in its capacity as such) or in the name of a nominee of the Trustee,
in each case, for the benefit of the Certificateholders. The Trustee shall be
entitled to sole control (except with respect to investment direction of funds
held in the Collection Account and any income and gain realized thereon) over
each such investment, and any certificate or other instrument evidencing any
such investment shall be delivered directly to the Trustee or its agent,
together with any document of transfer necessary to transfer title to such
investment to the Trustee or its nominee. In the event amounts on deposit in
an Investment Account are at any time invested in a Permitted Investment
payable on demand, the Trustee shall:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on the last
day such Permitted Investment may otherwise mature hereunder
in an amount equal to the lesser of (1) all amounts then
payable thereunder and (2) the amount required to be
withdrawn on such date; and
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(y) demand payment of all amounts due thereunder
promptly upon determination by a Responsible Officer of the
Trustee that such Permitted Investment would not constitute
a Permitted Investment in respect of funds thereafter on
deposit in the Investment Account.
(b) All income and gain realized from the investment of
funds deposited in the Collection Account and any REO Account held by or on
behalf of the Servicer, shall be for the benefit of the Servicer and shall be
subject to its withdrawal in accordance with Section 3.11 or Section 3.23, as
applicable or withdrawal by the Trustee in accordance with Section 3.11. The
Servicer shall deposit in the Collection Account or any REO Account, as
applicable, the amount of any loss of principal incurred in respect of any
such Permitted Investment made with funds in the Collection Account or REO
Account immediately upon realization of such loss.
(c) All income and gain realized from the investment of
funds deposited in the Distribution Account held by or on behalf of the
Trustee shall be for the benefit of the Trustee and shall be subject to
withdrawal by the Trustee at any time. The Trustee shall deposit in the
Distribution Account, the amount of any loss of principal incurred in respect
of any such Permitted Investment made with funds in such accounts immediately
upon realization of such loss.
(d) Except as otherwise expressly provided in this
Agreement, if any default occurs in the making of a payment due under any
Permitted Investment, or if a default occurs in any other performance required
under any Permitted Investment, the Trustee may and, subject to Section 8.01
and Section 8.02(v), upon the request of the Holders of Certificates
representing more than 50% of the Voting Rights allocated to any Class of
Certificates, shall take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of
appropriate proceedings.
SECTION 3.13. RESERVED.
SECTION 3.14. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage.
(a) The Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the least of (i) the current
principal balance of such Mortgage Loan, (ii) the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis and (iii) the maximum insurable value of
the improvements which are a part of such Mortgaged Property, in each case in
an amount not less than such amount as is necessary to avoid the application
of any coinsurance clause contained in the related hazard insurance policy.
The Servicer shall also cause to be maintained fire insurance with extended
coverage on each REO Property in an amount which is at least equal to the
lesser of (i) the maximum insurable value of the improvements which are a part
of such property and (ii) the outstanding principal balance of the related
Mortgage Loan at the time it became an REO Property, plus accrued interest at
the related Mortgage Rate and related Servicing Advances. The Servicer will
comply in the performance of this Agreement with all reasonable rules and
requirements of each insurer under any such hazard policies. Any amounts to be
collected by the
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Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the property subject to the related Mortgage Loan or
amounts to be released to the related Mortgagor in accordance with the
procedures that the Servicer would follow in servicing loans held for its own
account, subject to the terms and conditions of the related Mortgage Loan and
related Mortgage Note) shall be deposited in the Collection Account, subject
to withdrawal pursuant to Section 3.11, if received in respect of a Mortgage
Loan, or in the REO Account, subject to withdrawal pursuant to Section 3.23,
if received in respect of an REO Property. Any cost incurred by the Servicer
in maintaining any such insurance shall not, for the purpose of calculating
distributions to Certificateholders, be added to the unpaid principal balance
of the related Mortgage Loan, notwithstanding that the terms of such Mortgage
Loan so permit. Any insurance premiums not paid by the related Mortgagor and
advanced by the Servicer shall constitute a Servicing Advance. It is
understood and agreed that no earthquake or other additional insurance is to
be required of any Mortgagor other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property or REO Property is at any time
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards and flood insurance has been
made available, the Servicer will cause to be maintained a flood insurance
policy in respect thereof. Such flood insurance shall be in an amount equal to
the lesser of (i) the unpaid principal balance of the related Mortgage Loan
and (ii) the maximum amount of such insurance available for the related
Mortgaged Property under the national flood insurance program (assuming that
the area in which such Mortgaged Property is located is participating in such
program).
In the event that the Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of B:III or
better in Best's Key Rating Guide (or such other rating that is comparable to
such rating) 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 3.14, it being understood and agreed
that such policy may contain a deductible clause, in which case the Servicer
shall, in the event that there shall not have been maintained on the related
Mortgaged Property or related REO Property a policy complying with the first
two sentences of this Section 3.14, and there shall have been one or more
losses which would have been covered by such policy, deposit to the Collection
Account from its own funds the amount not otherwise payable under the blanket
policy because of such deductible clause. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Servicer agrees to
prepare and present, on behalf of itself, the Trustee and Certificateholders,
claims under any such blanket policy in a timely fashion in accordance with
the terms of such policy.
(b) The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Servicer's obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of Xxxxxx Xxx or Xxxxxxx Mac if it were the purchaser of the
Mortgage Loans, unless the Servicer has obtained a waiver of such requirements
from Xxxxxx Mae or Xxxxxxx Mac. The Servicer shall also maintain a fidelity
bond in the form and amount that would meet the requirements of Xxxxxx Mae or
Xxxxxxx Mac, unless the Servicer has obtained a waiver of such requirements
from Xxxxxx Mae or Xxxxxxx Mac. The Servicer shall provide the Trustee (upon
its reasonable request) with copies of any such insurance policies and
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fidelity bond. The Servicer shall be deemed to have complied with this
provision if an Affiliate of the Servicer has such errors and omissions and
fidelity bond coverage and, by the terms of such insurance policy or fidelity
bond, the coverage afforded thereunder extends to the Servicer. Any such
errors and omissions policy and fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the Trustee. The
Servicer shall also cause each Sub-Servicer to maintain a policy of insurance
covering errors and omissions and a fidelity bond which would meet such
requirements.
SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
The Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property by any
Mortgagor (whether by absolute conveyance or by contract of sale, and whether
or not such Mortgagor remains or is to remain liable under the applicable
Mortgage Note and/or the related Mortgage), exercise its rights to accelerate
the maturity of such Mortgage Loan under the "due-on-sale" clause, if any,
applicable thereto; provided, however, that the Servicer shall not be required
to take such action if in its sole business judgment the Servicer believes it
is not in the best interests of the Trust Fund and shall not exercise any such
rights if prohibited by law from doing so. If the Servicer reasonably believes
it is unable under applicable law to enforce such "due-on-sale" clause, or if
any of the other conditions set forth in the proviso to the preceding sentence
apply, the Servicer will enter into an assumption and modification agreement
from or 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 related
Mortgage Note and, to the extent permitted by applicable state law, the
related Mortgagor remains liable thereon. The Servicer is also authorized to
enter into a substitution of liability agreement with such person, pursuant to
which the original related Mortgagor is released from liability and such
person is substituted as the Mortgagor and becomes liable under the related
Mortgage Note, provided that no such substitution shall be effective unless
such person satisfies the underwriting criteria of the Servicer and has a
credit risk rating at least equal to that of the original related Mortgagor.
In connection with any assumption, modification or substitution, the Servicer
shall apply such underwriting standards and follow such practices and
procedures as shall be normal and usual in its general mortgage servicing
activities and as it applies to other mortgage loans owned solely by it. The
Servicer shall not take or enter into any assumption and modification
agreement, however, unless (to the extent practicable in the circumstances) it
shall have received confirmation, in writing, of the continued effectiveness
of any applicable hazard insurance policy, or a new policy meeting the
requirements of this Section is obtained. Any fee collected by the Servicer in
respect of an assumption, modification or substitution of liability agreement
will be retained by the Servicer as additional servicing compensation. In
connection with any such assumption, no material term of the related Mortgage
Note (including but not limited to the related Mortgage Rate and the amount of
the related Monthly Payment) may be amended or modified, except as otherwise
required pursuant to the terms thereof. The Servicer shall notify the
applicable Custodian that any such substitution, modification or assumption
agreement has been completed by forwarding to the Trustee the executed
original of such substitution, modification or assumption agreement, which
document 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. Notwithstanding
the foregoing, the Servicer may enforce the due on sale clause,
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or the assumption and modification, or the substitution if it reasonably
believes that it is in the best interest of the Trust Fund.
Notwithstanding the foregoing paragraph or any other
provision of this Agreement, the Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason
of any assumption of a Mortgage Loan by operation of law or by the terms of
the related Mortgage Note or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatever. For purposes of
this Section 3.15, the term "assumption" is deemed to also include a sale (of
the Mortgaged Property) subject to the Mortgage that is not accompanied by an
assumption or substitution of liability agreement.
SECTION 3.16. Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall use its commercially reasonable
efforts consistent with the servicing standard set forth in Section 3.01, to
foreclose upon or otherwise comparably convert the ownership of properties
securing such of the Mortgage Loans (including selling any such Mortgage Loan
rather than converting the ownership of the related properties if such sale
would maximize the timely and complete recovery of principal and interest on
the related Mortgage Note in accordance with the servicing standard set forth
in Section 3.01) 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. The Servicer shall be responsible for all costs and
expenses incurred by it in any such proceedings; provided, however, that such
costs and expenses will be recoverable as Servicing Advances or Nonrecoverable
Servicing Advances by the Servicer as contemplated in Section 3.11 and Section
3.23. The foregoing is subject to the provision that, in any case in which a
Mortgaged Property shall have suffered damage from an Uninsured Cause, the
Servicer shall not be required to expend its own funds toward the restoration
of such property unless it shall determine in its sole and absolute discretion
that such restoration will increase the proceeds of liquidation of the related
Mortgage Loan after reimbursement to itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section
3.16 or any other provision of this Agreement, with respect to any Mortgage
Loan as to which the Servicer has received actual notice of, or has actual
knowledge of, the presence of any toxic or hazardous substance on the related
Mortgaged Property, the Servicer shall not, on behalf of the Trust Fund,
either (i) obtain title to such Mortgaged Property as a result of or in lieu
of foreclosure or otherwise or (ii) otherwise acquire possession of, or take
any other action with respect to, such Mortgaged Property, if, as a result of
any such action, the Trustee, the Trust Fund or the Certificateholders would
be considered to hold title to, to be a "mortgagee-in-possession" of, or to be
an "owner" or "operator" of such Mortgaged Property within the meaning of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended from time to time, or any comparable law, unless the Servicer has
also previously determined, based on its reasonable judgment and a report
prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:
(1) such Mortgaged Property is in compliance with
applicable environmental laws or, if not, that it would be
in the best economic interest of the
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Trust Fund to take such actions as are necessary to bring
such Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such
Mortgaged Property relating to the use, management or
disposal of any hazardous substances, hazardous materials,
hazardous wastes, or petroleum-based materials for which
investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or
local law or regulation, or that if any such materials are
present for which such action could be required, that it
would be in the best economic interest of the Trust Fund to
take such actions with respect to such affected Mortgaged
Property.
The cost of the environmental audit report contemplated by
this Section 3.16 shall be advanced by the Servicer, subject to the Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.11(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans. It is
understood by the parties hereto that any such advance will be deemed a
Servicing Advance.
If the 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 into 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 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, cleanup or remediation shall be advanced by the Servicer, subject
to the Servicer's right to be reimbursed therefor from the Collection Account
as provided in Section 3.11(a)(ix), such right of reimbursement being prior to
the rights of Certificateholders to receive any amount in the Collection
Account received in respect of the affected Mortgage Loan or other Mortgage
Loans. It is understood by the parties hereto that any such advance will be
deemed a Servicing Advance.
(c) The Servicer may at its option purchase from the Trust
Fund any Mortgage Loan or related REO Property that is 90 days or more
Delinquent, which the Servicer determines in good faith will otherwise become
subject to foreclosure proceedings (evidence of such determination to be
delivered in writing to the Trustee prior to purchase), at a price equal to
the Purchase Price; provided, however, that the Servicer shall purchase any
such Mortgage Loans or related REO Properties on the basis of delinquency,
purchasing the most Delinquent Mortgage Loans or related REO Properties first.
The Purchase Price for any Mortgage Loan or related REO Property purchased
hereunder shall be deposited in the Collection Account, and the Trustee, upon
receipt of written certification from the Servicer of such deposit, shall
release or cause to be released to the Servicer the related Mortgage File and
the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as the Servicer shall furnish and
as shall be necessary to vest in the Servicer title to any Mortgage Loan or
related REO Property released pursuant hereto.
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(d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Servicer or any Sub-Servicer for any related unreimbursed Servicing Advances
and P&I Advances, pursuant to Section 3.11(a)(ii) or Section 3.11(a)(iii);
second, to accrued and unpaid interest on the related Mortgage Loan, to the
date of the Final Recovery Determination, or to the Due Date prior to the
Distribution Date on which such amounts are to be distributed if not in
connection with a Final Recovery Determination; and third, as a recovery of
principal of such Mortgage Loan. If the amount of the recovery so allocated to
interest is less than the full amount of accrued and unpaid interest due on
such Mortgage Loan, the amount of such recovery will be allocated by the
Servicer as follows: first, to unpaid Servicing Fees; and second, to the
balance of the interest then due and owing. The portion of the recovery so
allocated to unpaid Servicing Fees shall be reimbursed to the Servicer or any
related Sub-Servicer pursuant to Section 3.11(a)(iii).
SECTION 3.17. Trustee to Cooperate; Release of Mortgage
Files.
(a) Upon the payment in full of any Mortgage Loan, or the
receipt by the Servicer of a notification that payment in full shall be
escrowed in a manner customary for such purposes, the Servicer will promptly
notify the Trustee or the Custodian by a certification in the form of Exhibit
E-2 (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 Collection Account pursuant to Section 3.10
have been or will be so deposited) signed by a Servicing Officer and shall
request delivery to it of the related Mortgage File. Upon receipt of such
certification and request, the Trustee or the Custodian shall, within five
Business Days, release or cause the release and mailing by overnight mail of
the related Mortgage File to the Servicer. No expenses incurred in connection
with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the Collection Account or the Distribution Account.
(b) 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 Loans, the Trustee shall,
upon request of the Servicer and delivery to the Trustee or the Custodian, if
permitted by the custodial agreement, of a Request for Release in the form of
Exhibit E-1, cause the release of the related Mortgage File to the Servicer,
and the Trustee shall, at the direction of the Servicer, execute such
documents as shall be necessary to the prosecution of any such proceedings and
the Servicer shall retain such Mortgage File in trust for the benefit of the
Certificateholders. Such Request for Release shall obligate the Servicer to
return each and every document previously requested from such Mortgage File to
the Trustee or the Custodian when the need therefor by the Servicer no longer
exists, unless the related Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to such Mortgage Loan have been deposited in the
Collection Account or the related 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 related Mortgaged Property either
judicially or non-judicially, and the Servicer has delivered to the Trustee a
certificate of a Servicing Officer certifying as to the name and address of
the Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery. Upon receipt of a certificate of such
Servicing Officer stating that
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such Mortgage Loan was liquidated and that all amounts received or to be
received in connection with such liquidation that are required to be deposited
into the Collection Account have been so deposited, or that such Mortgage Loan
has become an REO Property, such Mortgage Loan shall be released by the
Trustee or the Custodian to the Servicer or its designee.
(c) Upon written certification of a Servicing Officer, the
Trustee shall execute and deliver to the Servicer any court pleadings,
requests for trustee's sale or other documents reasonably 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 related
Mortgage Note or related Mortgage or to obtain a deficiency judgment, or to
enforce any other remedies or rights provided by such Mortgage Note or
Mortgage or otherwise available at law or in equity, or shall exercise and
deliver to the Servicer a power of attorney sufficient to authorize the
Servicer to execute such documents on its behalf, provided that the Trustee
shall be obligated to execute the documents identified above if necessary to
enable the Servicer to perform its duties hereunder. Each such certification
shall include a request that such pleadings or documents be executed by the
Trustee and a statement as to the reason such documents or pleadings are
required and that the execution thereof by the Trustee and delivery thereof by
the Trustee or the Custodian as applicable will not invalidate or otherwise
affect the lien of the related Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.
SECTION 3.18. Servicing Compensation.
As compensation for the activities of the Servicer
hereunder, the Servicer shall be entitled to the Servicing Fee with respect to
each Mortgage Loan payable solely from payments of interest in respect of such
Mortgage Loan, subject to Section 3.24. In addition, the Servicer shall be
entitled to recover unpaid Servicing Fees out of Late Collections, Insurance
Proceeds, condemnation proceeds or Liquidation Proceeds to the extent
permitted by Section 3.11(a)(iii) and out of amounts derived from the
operation and sale of an REO Property to the extent permitted by Section 3.23.
The right to receive the Servicing Fee may not be transferred in whole or in
part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement; provided, however, that
the Servicer may pay from the related Servicing Fee any amounts due to a
related Sub-Servicer pursuant to a Sub-Servicing Agreement entered into under
Section 3.02.
Additional servicing compensation in the form of assumption
or modification fees, late payment charges, insufficient funds fees,
reconveyance fees and other ancillary fees (other than Prepayment Charges)
shall be retained by the Servicer (subject to Section 3.24) only to the extent
such fees or charges are received by the Servicer. The Servicer shall also be
entitled pursuant to Section 3.11(a)(iv) to withdraw from the Collection
Account, and pursuant to Section 3.23(b) to withdraw from any REO Account, as
additional servicing compensation, interest or other income earned on deposits
therein, subject to Section 3.12 and Section 3.24. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including premiums for the insurance required by Section
3.14, to the extent such premiums are not paid by the related Mortgagors or by
a related Sub-Servicer, it being understood however, that payment of such
premiums by the Servicer shall constitute Servicing Advances), servicing
compensation of any Sub-Servicer and to the extent provided herein in
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Section 8.05, the indemnification of the Trustee, and shall not be entitled to
reimbursement therefor except as specifically provided herein.
SECTION 3.19. Reports to the Trustee; Collection Account
Statements and Other Reporting Obligations
(a) Not later than thirty days after each Distribution Date,
the Servicer shall forward to the Trustee and the Depositor a statement
prepared by the Servicer setting forth the status of the Collection Account as
of the close of business on such Distribution Date and showing, for the period
covered by such statement, the aggregate amount of deposits into and
withdrawals from the Collection Account of each category of deposit specified
in Section 3.10(a) and each category of withdrawal specified in Section
3.11(a). Such statement may be in the form of the then current Xxxxxx Xxx
Monthly Accounting Report for its Guaranteed Mortgage Pass-Through Program
with appropriate additions and changes, and shall also include information as
to the aggregate of the outstanding principal balances of all of the Mortgage
Loans as of the last day of the calendar month immediately preceding such
Distribution Date. Copies of such statement shall be provided by the Trustee
to any Certificateholder and to any Person identified to the Trustee as a
prospective transferee of a Certificate, upon request and at the expense of
the requesting party, provided such statement is delivered by the Servicer to
the Trustee. In addition, the Servicer shall provide such statement and all
other loan level information relating to the Mortgage Loans that the Holder of
the Residual Certificates may reasonably request, provided, however, that such
request will be at the expense of such Holder of the Residual Certificates.
(b) The Servicer shall accurately and fully report its
borrower credit files to all three credit repositories in a timely manner.
(c) At the request of an Originator, the Servicer shall
provide such Originator with loan level information with respect to the
related Mortgage Loans, provided that such request is reasonable and shall be
subject to the approval of the Holder of the Residual Certificates. Any such
request for loan level information shall be at the sole expense of the
Originator requesting such information.
SECTION 3.20. Statement as to Compliance.
The Servicer will deliver to the Trustee, the Depositor,
each Rating Agency and the Counterparty on or before 90 days following the end
of the Servicer's fiscal year commencing in 2003, an Officers' Certificate
stating, as to each signatory thereof, that (i) a review of the activities of
the Servicer during the preceding year and of performance under this Agreement
has been made under such officers' supervision and (ii) to the best of such
officers' knowledge, based on such review, the Servicer has fulfilled all of
its obligations under this Agreement throughout such year, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. Copies of any
such statement shall be provided by the Trustee to any Certificateholder upon
the request and at the expense of the requesting party, provided that such
statement is delivered by the Servicer to the Trustee.
As of the Closing Date, the Servicer's fiscal year ends on
December 31st.
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SECTION 3.21. Independent Public Accountants' Servicing
Report.
Not later than 90 days following the end of the Servicer's
fiscal year commencing in 2003, the Servicer, at its expense, shall cause a
nationally recognized firm of independent certified public accountants to
furnish to the Servicer a report stating that (i) it has obtained a letter of
representation regarding certain matters from the management of the Servicer
which includes an assertion that the Servicer has complied with certain
minimum residential mortgage loan servicing standards, identified in the
Uniform Single Attestation Program for Mortgage Bankers established by the
Mortgage Bankers Association of America, with respect to the servicing of
residential mortgage loans during the most recently completed fiscal 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.
In rendering its report such firm may rely, as to matters relating to the
direct servicing of residential mortgage loans by a Sub-Servicer, upon
comparable reports of firms of independent certified public accountants
rendered on the basis of examinations conducted in accordance with the same
standards (rendered within one year of such report) with respect to such
Sub-Servicer. Promptly upon receipt of such report, the Servicer shall furnish
a copy of such report to the Trustee and each Rating Agency. Copies of such
statement shall be provided by the Trustee to any Certificateholder upon
request at the Servicer's expense, provided that such statement is delivered
by the Servicer to the Trustee. In the event such firm of independent
certified public accountants requires the Trustee to agree to the procedures
performed by such firm, the Servicer shall direct the Trustee in writing to so
agree; it being understood and agreed that the Trustee will deliver such
letter of agreement in conclusive reliance upon the direction of the Servicer,
and the Trustee has not made any independent inquiry or investigation as to,
and shall have no obligation or liability in respect of, the sufficiency,
validity or correctness of such procedures.
SECTION 3.22. Access to Certain Documentation.
The Servicer shall provide to the Office of Thrift
Supervision, the FDIC, and any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder,
access to the documentation regarding the Mortgage Loans under this Agreement,
as may be required by applicable laws and regulations. Such access shall be
afforded without charge, but only upon reasonable request and during normal
business hours at the offices of the Servicer. In addition, access to the
documentation regarding the Mortgage Loans serviced by the Servicer under this
Agreement will be provided to any Certificateholder, the Trustee and to any
Person identified to the Servicer as a prospective transferee of a
Certificate, upon reasonable request during normal business hours at the
offices of the Servicer at the expense of the Person requesting such access.
SECTION 3.23. Title, Management and Disposition of REO
Property.
(a) The deed or certificate of sale of any REO Property
shall be taken in the name of the Trustee, or its nominee, in trust for the
benefit of the Certificateholders. The Servicer, on behalf of the Trust Fund
(and on behalf of the Trustee for the benefit of the Certificateholders),
shall either sell any REO Property before the close of the third taxable year
after the year the Trust Fund acquires ownership of such REO Property for
purposes of Section 860G(a)(8) of the
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Code or request from the Internal Revenue Service, no later 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 Servicer shall have
delivered to the Trustee and the Depositor an Opinion of Counsel, addressed to
the Trustee and the Depositor, to the effect that the holding by the Trust
Fund of such REO Property subsequent to three years after its acquisition will
not result in the imposition on any REMIC created hereunder of taxes on
"prohibited transactions" thereof, as defined in Section 860F of the Code, or
cause any REMIC created hereunder to fail to qualify as a REMIC under Federal
law at any time that any Certificates are outstanding. The 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) of the Code or
result in the receipt by any REMIC created hereunder 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.
(b) The 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 and shall establish
and maintain, or cause to be established and maintained, with respect to REO
Properties an account held in trust for the Trustee for the benefit of the
Certificateholders (the "REO Account"), which shall be an Eligible Account.
The Servicer shall be permitted to allow the Collection Account to serve as an
REO Account, subject to separate ledgers for each REO Property. The Servicer
shall be entitled to retain or withdraw any interest income paid on funds
deposited in the REO Account.
(c) The Servicer shall have full power and authority,
subject only to the specific requirements and prohibitions of this Agreement,
to do any and all things in connection with any REO Property as are consistent
with the manner in which the Servicer manages and operates similar property
owned by the Servicer or any of its Affiliates, all on such terms and for such
period as the Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the Servicer shall deposit, or
cause to be deposited in the clearing account (which account must be an
Eligible Account) in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Servicer's
receipt thereof, and shall thereafter deposit in the REO Account, in no event
more than two Business Days after the deposit of such funds into the clearing
account, all revenues received by it with respect to an REO Property and shall
withdraw therefrom funds necessary for the proper operation, management and
maintenance of such REO Property including, without limitation:
(i) all insurance premiums due and payable in respect of such
REO Property;
(ii) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain such REO
Property.
To the extent that amounts on deposit in the REO Account with respect to an
REO Property are insufficient for the purposes set forth in clauses (i)
through (iii) above with respect to such REO
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Property, the Servicer shall advance from its own funds as Servicing Advances
such amount as is necessary for such purposes if, but only if, the Servicer
would make such advances if it owned such REO Property and if in the
Servicer's sole judgment, the payment of such amounts will be recoverable from
the rental or sale of such REO Property.
Notwithstanding the foregoing, the Servicer shall not:
(i) authorize the Trust Fund to enter into, renew or
extend any New Lease with respect to any REO Property,
if the New Lease by its terms will give rise to any
income that does not constitute Rents from Real
Property;
(ii) authorize any amount to be received or accrued
under any New Lease other than amounts that will
constitute Rents from Real Property;
(iii) authorize any construction on any REO Property,
other than the completion of a building or other
improvement thereon, and then only if more than ten
percent of the construction of such building or other
improvement was completed before default on the
related Mortgage Loan became imminent, all within the
meaning of Section 856(e)(4)(B) of the Code; or
(iv) authorize any Person to Directly Operate any REO
Property on any date more than 90 days after its date
of acquisition by the Trust Fund;
unless, in any such case, the Servicer has obtained an Opinion of Counsel,
provided to the Trustee, to the effect that such action will not cause such
REO Property to fail to qualify as "foreclosure property" within the meaning
of Section 860G(a)(8) of the Code at any time that it is held by the Trust
Fund, in which case the Servicer may take such actions as are specified in
such Opinion of Counsel.
The Servicer may contract with any Independent Contractor
for the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract
shall not be inconsistent herewith;
(ii) any such contract shall require, or shall be
administered to require, that the Independent
Contractor pay all costs and expenses incurred in
connection with the operation and management of such
REO Property, including those listed above and remit
all related revenues (net of such costs and expenses)
to the Servicer as soon as practicable, but in no
event later than thirty days following the receipt
thereof by such Independent Contractor;
(iii) none of the provisions of this Section 3.23(c)
relating to any such contract or to actions taken
through any such Independent Contractor shall be
deemed to relieve the Servicer of any of its duties
and obligations to the
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Trustee on behalf of the Certificateholders with
respect to the operation and management of any such
REO Property; and
(iv) the Servicer shall be obligated with respect
thereto to the same extent as if it alone were
performing all duties and obligations in connection
with the operation and management of such REO
Property.
The Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Servicer by such Independent
Contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. The Servicer shall be solely liable for all fees owed by
it to any such Independent Contractor, irrespective of whether the Servicer's
compensation pursuant to Section 3.18 is sufficient to pay such fees;
provided, however, that to the extent that any payments made by such
Independent Contractor would constitute Servicing Advances if made by the
Servicer, such amounts shall be reimbursable as Servicing Advances made by the
Servicer.
(d) In addition to the withdrawals permitted under Section
3.23(c), the Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself or any Sub-Servicer unpaid
Servicing Fees in respect of the related Mortgage Loan; and (ii) to reimburse
itself or any Sub-Servicer for unreimbursed Servicing Advances and P&I
Advances made in respect of such REO Property or the related Mortgage Loan. On
the Servicer Remittance Date, the Servicer shall withdraw from each REO
Account maintained by it and deposit into the Distribution Account in
accordance with Section 3.10(d)(ii), for distribution on the related
Distribution Date in accordance with Section 4.01, the income from the related
REO Property received during the prior calendar month, net of any withdrawals
made pursuant to Section 3.23(c) or this Section 3.23(d).
(e) Subject to the time constraints set forth in Section
3.23(a), each REO Disposition shall be carried out by the Servicer at such
price and upon such terms and conditions as the Servicer shall deem necessary
or advisable, as shall be normal and usual in its general servicing activities
for similar properties.
(f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage
Loan and net of any payment or reimbursement to the Servicer or any
Sub-Servicer as provided above, shall be deposited in the Distribution Account
in accordance with Section 3.10(d)(ii) on the Servicer Remittance Date in the
month following the receipt thereof for distribution on the related
Distribution Date in accordance with Section 4.01. 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).
(g) The Servicer shall file information returns with respect
to the receipt of mortgage interest received in a trade or business, reports
of foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to such Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. 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.
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SECTION 3.24. Obligations of the Servicer in Respect of
Prepayment Interest Shortfalls.
The Servicer shall deliver to the Trustee for deposit into
the Distribution Account on or before 1:00 p.m. New York time on the Servicer
Remittance Date from its own funds an amount (such amount, "Compensating
Interest") equal to the lesser of (i) the aggregate of the Prepayment Interest
Shortfalls for the related Distribution Date resulting solely from voluntary
Principal Prepayments in full or in part for any Mortgage Loan during the
related Prepayment Period and (ii) up to the amount of its aggregate Servicing
Fee for the most recently ended calendar month. The Servicer shall not have
the right to reimbursement for any amounts remitted to the Trustee in respect
of Compensating Interest. Such amounts remitted shall be included in the
Available Distribution Amount and distributed therewith on the related
Distribution Date. The Servicer shall not be obligated to pay Compensating
Interest with respect to Relief Act Interest Shortfalls.
SECTION 3.25. Obligations of the Servicer in Respect of
Mortgage Rates and Monthly Payments.
On each Adjustment Date, the Servicer shall make Mortgage
Rate adjustments for each Adjustable Rate Mortgage Loan in compliance with the
requirements of the related Mortgage and Mortgage Note and Applicable
Regulations. The Servicer shall execute and deliver the notices required by
each Mortgage and Mortgage Note and Applicable Regulations regarding Mortgage
Rate adjustments. The Servicer shall maintain all data and information
regarding such Mortgage Rate adjustments and the Servicer's methods of
implementing such Mortgage Rate adjustments and shall provide such information
to the Trustee upon request.
In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to
adjustments to Mortgage Rates, Monthly Payments or Stated Principal Balances
that were made by the Servicer in a manner not consistent with the terms of
the related Mortgage Note and this Agreement, the Servicer, upon discovery or
receipt of notice thereof, immediately shall deliver to the Trustee for
deposit in the Distribution Account from its own funds the amount of any such
shortfall and shall indemnify and hold harmless the Trust Fund, the Trustee,
the Depositor and any successor servicer in respect of any such liability.
Such indemnities shall survive the termination or discharge of this Agreement.
Notwithstanding the foregoing, this Section 3.25 shall not limit the ability
of the Servicer to seek recovery of any such amounts from the related
Mortgagor under the terms of the related Mortgage Note, as permitted by law.
SECTION 3.26. Net WAC Fund; Yield Maintenance Agreement.
(a) On the Closing Date, the Depositor will deposit, or
cause to be deposited, into the Net WAC Fund, $5,000. On each Distribution
Date as to which there is Net WAC Carryover Amount for any Class of LIBOR
Certificates, the Trustee is hereby directed to, and shall therefore, deposit
into the Net WAC Fund an amount equal to the Net WAC Carryover Amount for each
affected Class of LIBOR Certificates pursuant to Section 4.01(a)(3)(xiii). If
no Net WAC Carryover Amount is payable on a Distribution Date, the Trustee
shall deposit into the Net WAC Fund the Required Net WAC Fund Deposit. For
federal and state income tax purposes,
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the Class X Certificateholders will be deemed to be the owners of the Net WAC
Fund and all amounts deposited into the Net WAC Fund. Any monies held in the
Net WAC Fund in excess of the Required Net WAC Fund Deposit on any
Distribution Date shall be distributed to the Class X Certificateholders.
Amounts held in the Net WAC Fund and not distributable to the Holders of LIBOR
Certificates on any Distribution Date will be invested by the Trustee in
investments identified in clause (f) of the definition of Permitted
Investments having maturities on or prior to the next succeeding Distribution
Date on which such amounts will be distributable to the Holders of the Classes
of LIBOR Certificates. Upon the termination of the Trust Fund, or the payment
in full of the LIBOR Certificates, all amounts remaining on deposit in the Net
WAC Fund will be released from the lien of the Trust Fund and distributed to
the Class X Certificateholders or their designees. The Net WAC Fund will be
part of the Trust Fund but not part of any REMIC and any payments to the LIBOR
Certificates of Net WAC Carryover Amount with respect to any Class of LIBOR
Certificates will not be payments with respect to a "regular interest" in a
REMIC within the meaning of Code Section 860G(a)(1). For federal tax return
and information reporting, the Net WAC Carryover Amount shall be assigned a
value of zero.
(b) The Depositor hereby directs the Trustee, to execute and
deliver on behalf of the Trust the Yield Maintenance Agreement and authorizes
the Trustee to perform its obligations thereunder on behalf of the Trust in
accordance with the terms of the Yield Maintenance Agreement. On the Closing
Date, the Trustee shall enter into the Yield Maintenance Agreement, on behalf
of the Trust, with the Counterparty. The Trustee shall deposit all amounts
received with respect to the Yield Maintenance Agreement in the Net WAC Fund.
The Yield Maintenance Agreement shall be part of the Trust Fund but not part
of any REMIC.
(c) If any payments are owed to the Counterparty beginning
with the Distribution Date in July 2004, the Depositor shall direct the
Trustee to request and the Trustee shall request, the Counterparty to furnish
IRS Form W 8ECI to the Trustee.
(d) If the Counterparty no longer has a long-term credit
rating of at least A (or its equivalent) from at least one of the Rating
Agencies, the Trustee, shall within 30 days after the reduction or withdrawal
of the credit rating, (i) obtain a replacement Yield Maintenance Agreement
with a counterparty that is a bank or other financial institution that has a
rating that is in one of the three highest long-term credit rating categories
from at least one of the Rating Agencies rating the Certificates; (ii) obtain
a guaranty of or a contingent agreement of another person with a long-term
credit rating of at least A (or its equivalent) from at least one of the
Rating Agencies to honor the Counterparty's obligations under the Yield
Maintenance Agreement; (iii) cause the Counterparty to post xxxx-to-market
collateral with the Trustee in an amount sufficient to restore the immediately
prior ratings of the Offered Certificates; (iv) establish any other
arrangement satisfactory to the Rating Agencies to restore the ratings of the
Offered Certificates; or (v) terminate the Yield Maintenance Agreement in
accordance with its terms.
SECTION 3.27. Servicing Performance Evaluations
Within 60 days after a Servicer Evaluation Trigger Date, the
Trustee shall select and engage a nationally recognized independent auditor,
approved in writing by the Rating Agencies, unless such Rating Agencies
specifically waive such approval right (provided,
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however, that if the Trustee does not receive the written approval of any
Rating Agency within 20 days of selecting an independent auditor, such Rating
Agency will be deemed to have approved of such auditor), to evaluate the
performance of the Servicer. Such engagement by the Trustee shall require the
auditor to select a statistical sample of Delinquent Mortgage Loans
(comprising a percentage (determined by the independent auditor in its sole
discretion, which percentage shall not exceed 50%) of all Delinquent Mortgage
Loans by unpaid principal balance as of the Servicer Evaluation Trigger Date)
and to examine the servicing practices with respect to such Mortgage Loans
(including, without limitation, examining payment histories, documentation
relating to the Servicer's contacts with the related Mortgagors and documents
contained in the related Servicing File) for the period of 24 months prior to
such examination or, with respect to an examination taking place within 24
months of the Closing Date, the period beginning on the Closing Date and
ending on the date of such examination. Such engagement by the Trustee shall
also require the auditor to compare the servicing practices of the Servicer
with respect to the selected Mortgage Loans to the Performance Standards set
forth on Exhibit J hereto and to evaluate the Servicer's compliance with the
Performance Standards. The evaluation process described above in this Section
3.27 is referred to herein as a "Servicer Performance Evaluation" and is
subject in all respects to the approval of the Rating Agencies with such
approval right at the option of each Rating Agency. In the engagement, the
Trustee shall require the auditor to deliver the results of its Servicer
Performance Evaluation to the Trustee, the Rating Agencies and the
Counterparty and the Trustee shall report the Servicer Performance Evaluation
results to Certificateholders in its monthly statement, made pursuant to
Section 4.02.
After receipt of the results of the Servicer Performance
Evaluation, the Holders of the Certificates entitled to 51% of the Voting
Rights may make a written request to the Trustee to terminate the Servicer as
Servicer under this Agreement. If such a written request is made to the
Trustee, the Servicer will be deemed to have "failed" a Servicer Performance
Evaluation for purposes of the Servicer Termination Test.
At their option, each Rating Agency shall have the right to
review all of the information provided to the independent auditor in
connection with the Servicer Performance Evaluation so as to allow such Rating
Agency to evaluate the Servicer's compliance with the Performance Standards.
The Servicer shall cooperate with all reasonable requests of
the Trustee, the independent auditor and the Rating Agencies in connection
with the Servicer Performance Evaluation, including, without limitation,
making available to the auditor payment histories, documentation relating to
the Servicer's contacts with the related Mortgagors and documents contained in
the Servicing File. The Servicer shall pay all costs and expenses of the
Trustee, the independent auditor or any Rating Agency (including the costs of
any Rating Agency review pursuant to the foregoing paragraph) associated with
a Servicer Performance Evaluation.
SECTION 3.28. Advance Facility
(a) The Servicer is hereby authorized to enter into a
financing or other facility (any such arrangement, an "Advance Facility")
under which (1) the Servicer assigns or pledges to another Person (an
"Advancing Person") the Servicer's rights under this Agreement to be
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reimbursed for any P&I Advances or Servicing Advances and/or (2) an Advancing
Person agrees to fund some or all P&I Advances and/or Servicing Advances
required to be made by the Servicer pursuant to this Agreement. No consent of
the Trustee, Certificateholders or any other party is required before the
Servicer may enter into an Advance Facility; provided, however, that the
consent of the Trustee shall be required before the Servicer may cause to be
outstanding at one time more than one Advance Facility with respect to P&I
Advances or more than one Advance Facility with respect to Servicing Advances.
Notwithstanding the existence of any Advance Facility under which an Advancing
Person agrees to fund P&I Advances and/or Servicing Advances on the Servicer's
behalf, the Servicer shall remain obligated pursuant to this Agreement to make
P&I Advances and Servicing Advances pursuant to and as required by this
Agreement, and shall not be relieved of such obligations by virtue of such
Advance Facility. If the Servicer enters into an Advance Facility, and for so
long as an Advancing Person remains entitled to receive reimbursement for any
P&I Advances or Servicing Advances outstanding and previously unreimbursed
pursuant to this Agreement, then the Servicer may elect by providing written
notice to the Trustee not to be permitted to reimburse itself for P&I Advances
and/or Servicing Advances, as applicable, pursuant to Section 3.11(a) of this
Agreement, but following any such election, the Servicer shall be required to
include amounts collected that would otherwise be retained by the Servicer to
reimburse it for previously xxxxxxxxxxxx X&X Advances ("P&I Advance
Reimbursement Amounts") and/or previously unreimbursed Servicing Advances
("Servicing Advance Reimbursement Amounts" and together with P&I Advance
Reimbursement Amounts, "Reimbursement Amounts") (in each case to the extent
such type of Reimbursement Amount is included in the Advance Facility) in the
remittance to the Trustee made pursuant to this Agreement to the extent of
amounts on deposit in the Collection Account on the Servicer Remittance Date.
Notwithstanding anything to the contrary herein, in no event shall P&I Advance
Reimbursement Amounts or Servicing Advance Reimbursement Amounts be included
in Interest Remittance Amounts or Principal Remittance Amounts or distributed
to Certificateholders. The Servicer making the election set for herein shall
report to the Trustee the portions of the Reimbursement Amounts that consist
of P&I Advance Reimbursement Amounts and Servicing Advance Reimbursement
Amounts, respectively.
(b) If the Servicer enters into an Advance Facility and
makes the election set forth in Section 3.28(a), the Servicer and the related
Advancing Person shall deliver to the Trustee a written notice and payment
instruction (an "Advance Facility Notice"), providing the Trustee with written
payment instructions as to where to remit P&I Advance Reimbursement Amounts
and/or Servicing Advance Reimbursement Amounts (each to the extent such type
of Reimbursement Amount is included within the Advance Facility) on subsequent
Distribution Dates. The payment instruction shall require the applicable
Reimbursement Amounts to be distributed to the Advancing Person or to a
trustee or custodian (an "Advance Facility Trustee") designated in the Advance
Facility Notice. An Advance Facility Notice may only be terminated by the
joint written direction of the Servicer and the related Advancing Person (and
any related Advance Facility Trustee); provided, however, that the provisions
of this Section 3.28 shall cease to be applicable when all P&I Advances and
Servicing Advances funded by an Advancing Person, and when all P&I Advances
and Servicing Advances (the rights to be reimbursed for which have been
assigned or pledged to an Advancing Person), have been repaid to the related
Advancing Person in full.
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(c) Reimbursement Amounts shall consist solely of amounts in
respect of P&I Advances and/or Servicing Advances made with respect to the
Mortgage Loans for which the Servicer would be permitted to reimburse itself
in accordance with Section 3.11(a)(ii), (iii) and (vi) hereof, assuming the
Servicer had made the related P&I Advance(s) and/or Servicing Advance(s).
Notwithstanding the foregoing, no Advancing Person shall be entitled to
reimbursement from funds held in the Collection Account for future
distribution to Certificateholders pursuant to the provisions of Section 4.03.
The Trustee shall not have any duty or liability with respect to the
calculation of any Reimbursement Amount and shall be entitled to rely without
independent investigation on the Advance Facility Notice and on the Servicer's
report of the amount of P&I Advance Reimbursement Amounts and Servicing
Advance Reimbursement Amounts that were included in the remittance from the
Servicer to the Trustee pursuant to Section 3.09(a)(i). The Servicer shall
maintain and provide to any successor Servicer a detailed accounting on a
loan-by-loan basis as to amounts advanced by, pledged or assigned to, and
reimbursed to any Advancing Person. The successor Servicer shall be entitled
to rely on any such information provided by the predecessor Servicer, and the
successor Servicer shall not be liable for any errors in such information.
(d) An Advancing Person who receives an assignment or pledge
of the rights to be reimbursed for P&I Advances and/or Servicing Advances,
and/or whose obligations hereunder are limited to the funding of P&I Advances
and/or Servicing Advances shall not be required to meet the criteria for
qualification of a Sub-Servicer set forth in Section 3.02 hereof.
(e) With respect to any Advance Facility pursuant to which
the Servicer has made the election set forth in Section 3.28(a), the
documentation establishing any Advance Facility shall require that
Reimbursement Amounts distributed with respect to each Mortgage Loan be
allocated to outstanding xxxxxxxxxxxx X&X Advances or Servicing Advances (as
the case may be) made with respect to that Mortgage Loan on a "first-in,
first-out" (FIFO) basis. Such documentation shall also require the electing
Servicer to provide to the related Advancing Person or Advance Facility
Trustee loan-by-loan information with respect to each Reimbursement Amount
distributed by the Trustee to such Advancing Person or Advance Facility
Trustee on each Distribution Date, to enable the Advancing Person or Advance
Facility Trustee to make the FIFO allocation of each Reimbursement Amount with
respect to each Mortgage Loan. The Servicer shall remain entitled to be
reimbursed by the Advancing Person or Advance Facility Trustee for all P&I
Advances and Servicing Advances funded by the Servicer to the extent the
related rights to be reimbursed therefor have not been assigned or pledged to
an Advancing Person.
(f) The Servicer who enters into an Advance Facility shall
indemnify the Trustee, the Trust and any successor Servicer, as applicable,
from and against any claims, losses, liabilities or damages resulting from any
claim by the Advancing Person, except to the extent that such claim, loss,
liability or damage resulted from or arose out of negligence, recklessness or
willful misconduct on the part of the Trustee or the successor Servicer, or
failure by the successor Servicer or the Trustee to remit funds as required by
this Agreement or the commission of an act or omission to act by the successor
Servicer or the Trustee, and the passage of any applicable cure or grace
period, such that a Servicer Event of Default under this Agreement occurs or
such entity is subject to termination for cause under this Agreement.
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(g) Any amendment to this Section 3.28 or to any other
provision of this Agreement that may be necessary or appropriate to effect the
terms of an Advance Facility as described generally in this Section 3.28,
including amendments to add provisions relating to a successor Servicer, may
be entered into by the Trustee, the Seller and the Servicer without the
consent of any Certificateholder, notwithstanding anything to the contrary in
Section 10.01 of or elsewhere in this Agreement.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a)(1) On each Distribution Date, the Trustee shall withdraw
from the Distribution Account an amount equal to the Interest Remittance
Amount and distribute to the Certificateholders and the Counterparty the
following amounts, in the following order of priority in each case, to the
extent of the Interest Remittance Amount remaining:
(i) concurrently to the Counterparty, the Strip Amount for
such Distribution Date and any unpaid Strip Amounts due from preceding
Distribution Dates;
(ii) concurrently to the Holders of the Class A-1
Certificates, the Class A-2 Certificates and the Class A-IO
Certificates, the related Interest Distribution Amount, on a pro rata
basis based on such Interest Distribution Amounts (such amounts
distributed to such Class being first applied against the related
Accrued Certificate Interest for such Distribution Date and then to
any Unpaid Interest Shortfall Amount);
(iii) to the Holders of the Class M1 Certificates, the
Accrued Certificate Interest allocable to such Class of Certificates;
(iv) to the Holders of the Class M2 Certificates, the
Accrued Certificate Interest allocable to such Class of Certificates;
and
(v) concurrently to the Holders of the Class B Certificates
and the Class B-IO Certificates, on a pro rata basis, the related
Accrued Certificate Interest allocable to each such Class of
Certificates.
(2) On each Distribution Date, the Trustee shall withdraw
from the Distribution Account an amount equal to the Principal Distribution
Amount and distribute to the Certificateholders the following amounts, in the
following order of priority:
(A) On each Distribution Date (a) prior to the Stepdown Date
or (b) on which a Trigger Event is in effect, the Principal
Distribution Amount shall be distributed sequentially, to the Class
A, Class M1, Class M2 and Class B Certificates, in that order, until
their respective Certificate Principal Balances have been reduced to
zero.
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(B) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect, the Principal
Distribution Amount shall be distributed in the following order of
priority:
1. the lesser of (x) the Principal Distribution Amount and
(y) the Class A Principal Distribution Amount, shall be distributed to the
Holders of the Class A Certificates, allocated in accordance with Section
4.01(f), until the aggregate Certificate Principal Balance of the Class A-1
Certificates has been reduced to zero;
2. the lesser of (x) the Principal Distribution Amount minus
the amounts distributed pursuant to clause (B)(1) above and (y) the Class M1
Principal Distribution Amount, shall be distributed to the Holders of the
Class M1 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero;
3. the lesser of (x) the Principal Distribution Amount minus
the amounts distributed pursuant to clauses (B)(1) and (B)(2) above, and (y)
the Class M2 Principal Distribution Amount, shall be distributed to the
Holders of the Class M2 Certificates, until the Certificate Principal Balance
thereof has been reduced to zero; and
4. the lesser of (x) the Principal Distribution Amount minus
the amounts distributed pursuant to clauses (B)(1) through (B)(3) above, and
(y) the Class B Principal Distribution Amount, shall be distributed to the
Holders of the Class B Certificates, until the Certificate Principal Balance
thereof has been reduced to zero.
(3) On each Distribution Date, other than the first
Distribution Date, the Net Monthly Excess Cashflow (or, in the case of clause
(i) below, the Net Monthly Excess Cashflow exclusive of any
Overcollateralization Reduction Amount) shall be distributed as follows:
(i) to the Holders of the Class or Classes of Certificates
then entitled to receive distributions in respect of principal, in an
amount equal to the principal portion of any Realized Losses incurred
or deemed to have been incurred on the Mortgage Loans during the
related Prepayment Period, applied in the same order of priority as
payments of principal would otherwise be applied on such Distribution
Date to reduce the Certificate Principal Balance of such Classes of
Certificates;
(ii) to the Holders of the Class or Classes of Certificates
then entitled to receive distributions in respect of principal, in an
amount equal to the Overcollateralization Increase Amount, applied in
the same order of priority as payments of principal would otherwise
be applied on such Distribution Date to reduce the Certificate
Principal Balance of such Certificates until the aggregate
Certificate Principal Balance of such Classes of Certificates is
reduced to zero;
(iii) to the Holders of the Class M1 Certificates, any Unpaid
Interest Shortfall Amount allocable to such Class of Certificates;
(iv) to the Holders of the Class M1 Certificates, any Unpaid
Realized Loss Amount for such Class of Certificates;
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(v) to the Holders of the Class M2 Certificates, any Unpaid
Interest Shortfall Amount allocable to such Class of Certificates;
(vi) to the Holders of the Class M2 Certificates, any Unpaid
Realized Loss Amount for such Class of Certificates;
(vii) concurrently to the Holders of the Class B and Class
B-IO Certificates, pro rata based on Unpaid Interest Shortfall
Amounts, any Unpaid Interest Shortfall Amount allocable to each such
Class of Certificates;
(viii) to the Holders of the Class B Certificates, any Unpaid
Realized Loss Amount for such Class of Certificates;
(ix) concurrently to the Holders of each Class of Class A
and Class A-IO Certificates, pro rata, in an amount equal to such
Holders allocated share of any Prepayment Interest Shortfalls (to the
extent not covered by payments pursuant to Section 3.24) and any
Relief Act Interest Shortfall allocated to each such Certificates;
(x) to the Holders of the Class M1 Certificates, in an
amount equal to such Holders allocated share of any Prepayment
Interest Shortfalls (to the extent not covered by payments pursuant
to Section 3.24) and any Relief Act Interest Shortfall allocated to
such Certificates;
(xi) to the Holders of the Class M2 Certificates, in an
amount equal to such Holders allocated share of any Prepayment
Interest Shortfalls (to the extent not covered by payments pursuant
to Section 3.24) and any Relief Act Interest Shortfall allocated to
such Certificates;
(xii) concurrently, to the Holders of the Class B and Class
B-IO Certificates, pro rata, in an amount equal to such Holders
allocated share of any Prepayment Interest Shortfalls (to the extent
not covered by payments pursuant to Section 3.24) and any Relief Act
Interest Shortfall allocated to each such Class of Certificates;
(xiii) to the Class X Certificate, the lesser of (i) the
Class X Distribution Amount attributable to the Class X Certificates
(computed without regard to this subparagraph (xiii)) and (ii) the
Net WAC Carryover Amount for each Class of LIBOR Certificates
provided that, pursuant to Section 3.26 hereof, on any Distribution
Date as to which there is any Net WAC Carryover Amount for any Class
of LIBOR Certificates, the Trustee will transfer, from amounts that
would otherwise be distributable to the Class X Certificates pursuant
to this clause, the amount of any Net WAC Carryover Amount for the
LIBOR Certificates into the Net WAC Fund, for immediate transfer
pursuant to this clause to the related LIBOR Certificates as payment
of Net WAC Carryover Amount for the LIBOR Certificates;
(xiv) to the Trustee, any amounts payable pursuant to
Section 8.05(b) hereof;
(xv) to the Holders of the Class X Certificates, the
Class X Distribution Amount net of the amount, if any, distributed
pursuant to subparagraph (xiii);
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(xvi) to the Counterparty, if an Early Termination Date has
been designated under the Yield Maintenance Agreement, any
Termination Payments or Carryover Termination Payments owed by the
Trust; and
(xvii) to the Holders of the Class R-I Certificates, any
remaining amounts; provided that if such Distribution Date is the
Distribution Date immediately following the expiration of the latest
Prepayment Charge term as identified on the Mortgage Loan Schedule or
any Distribution Date thereafter, then any such remaining amounts
will be distributed first, to the Holders of the related Class P
Certificates, until the Certificate Principal Balance thereof has
been reduced to zero; and second, to the Holders of the Class R-I
Certificates.
(4) The Trustee shall distribute the Net Monthly Excess
Cash Flow on the first Distribution Date to Credit Suisse First Boston
Corporation.
(b) On each Distribution Date, the Trustee shall withdraw
any amounts then on deposit in the Distribution Account that represent
Prepayment Charges collected by the Servicer in connection with the Principal
Prepayment of any of the Mortgage Loans or any Servicer Prepayment Charge
Payment Amount and shall distribute such amounts to the Holders of the Class P
Certificates. Such distributions shall not be applied to reduce the
Certificate Principal Balance of the Class P Certificates. On the first
Distribution on which the aggregate Certificate Principal Balance of the Class
A and the Subordinated Offered Certificates is reduced to zero, the Class P
Certificates shall be entitled to its Certificate Principal Balance prior to
any distributions being made pursuant to Section 4.01(a)(3) on such
Distribution Date.
(c) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated pro rata among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date will be made to the Holders of the respective Class of
record on the related Record Date (except as otherwise provided in Section
4.01(e) or Section 9.01 respecting the final distribution on such Class),
based on the aggregate Percentage Interest represented by their respective
Certificates, and shall be made by wire transfer of immediately available
funds to the account of any such Holder at a bank or other entity having
appropriate facilities therefor, if such Holder shall have so notified the
Trustee in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date or otherwise by check mailed by
first class mail to the address of such Holder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office or such other location specified in the notice to
Certificateholders of such final distribution.
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
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Trustee, the Certificate Registrar, the Depositor or the Servicer shall have
any responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(d) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. None of the Holders of any Class of Certificates, the Trustee or
the Servicer shall in any way be responsible or liable to the Holders of any
other Class of Certificates in respect of amounts properly previously
distributed on the Certificates.
(e) Except as otherwise provided in Section 9.01, whenever
the Trustee expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Trustee shall, no
later than five (5) days after the related Determination Date, mail to each
Holder on such date of such Class of Certificates a notice to the effect that:
(i) the Trustee expects 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 therein specified, and
(ii) no interest shall accrue on such Certificates from and
after the end of the related Interest Accrual Period.
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 by the Trustee 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(e) 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 one year
after the second notice all such Certificates shall not have been surrendered
for cancellation, the Trustee shall, directly or through an agent, mail a
final notice to remaining non-tendering Certificateholders concerning
surrender of their Certificates but shall continue to hold any remaining funds
for the benefit of non-tendering Certificateholders. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in such trust. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to the Depositor all such amounts, and all
rights of non-tendering Certificateholders in or to such amounts shall
thereupon cease. No interest shall accrue or be payable to any
Certificateholder on any amount held in trust by the Trustee as a result of
such Certificateholder's failure to surrender its Certificate(s) for final
payment thereof in accordance with this Section 4.01(e).
(f) Amounts distributed to the Class A1 and Class A2
Certificates on any Distribution Date pursuant to Section 4.01(a)(2) shall be
distributed as follows:
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(1) (x) The Class A1 Percentage of such amounts, to the
Class A1 Certificates, until the Certificate
Principal Balance is reduced to zero; and (y) the
Class A2 Percentage of such amounts, to the Class
A2 Certificates, until the Certificate Principal
Balance is reduced to zero;
(2) If the Certificate Principal Balance of either the
Class A1 or Class A2 Certificates is reduced to
zero, the portion of such amount that would have
been distributed to such Class pursuant to the
preceding subclause shall be distributed to the
remaining Class of Class A Certificates, until the
Certificate Principal Balance thereof is reduced to
zero.
SECTION 4.02. Statements to Certificateholders.
On each Distribution Date, the Trustee shall prepare and
make available to each Holder of the Regular Certificates, a statement with
respect to information regarding the Mortgage Loans, based solely on, and to
the extent of, information provided to the Trustee by the Servicer as to the
distributions made on such Distribution Date setting forth:
(i) the amount of the distribution made on such
Distribution Date to the Holders of the Certificates of each
Class allocable to principal, and the amount of distribution
made on such Distribution Date to the Holders of the related
Class P Certificates allocable to Prepayment Charges;
(ii) the amount of the distribution made on such
Distribution Date to the Holders of the Certificates of each
Class allocable to interest;
(iii) the aggregate Servicing Fee received by the
Servicer during the related Due Period and such other
customary information as the Trustee deems necessary or
desirable, or which a Certificateholder reasonably requests,
to enable Certificateholders to prepare their tax returns;
(iv) the aggregate amount of P&I Advances for such
Distribution Date;
(v) the aggregate Stated Principal Balance of the
Mortgage Loans and any REO Properties as of the close of
business on such Distribution Date;
(vi) the number, aggregate principal balance, weighted
average remaining term to maturity and weighted average
Mortgage Rate of the Mortgage Loans as of the related Due
Date;
(vii) separately by Originator, the number and
aggregate unpaid principal balance of the Mortgage Loans
originated by each Originator (a) Delinquent 30-59 days, (b)
Delinquent 60-89 days, (c) Delinquent 90 or more days in
each case, as of the last day of the preceding calendar
month, (d) as to which foreclosure proceedings have been
commenced and (e) with respect to which the related
Mortgagor has filed for protection under applicable
bankruptcy laws, with respect to whom bankruptcy proceedings
are pending or with respect to whom bankruptcy protection is
in force;
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(viii) with respect to any Mortgage Loan that became
an REO Property during the preceding calendar month, the
loan number of such Mortgage Loan, the unpaid principal
balance and the Stated Principal Balance of such Mortgage
Loan as of the date it became an REO Property;
(ix) the aggregate of the Stated Principal Balances of
all REO Properties as of the close of business on the last
Business Day of the calendar month preceding the
Distribution Date;
(x) the aggregate amount of Principal Prepayments made
during the related Prepayment Period;
(xi) the aggregate amount of Realized Losses incurred
during the related Prepayment Period (or, in the case of
Bankruptcy Losses allocable to interest, during the related
Due Period), separately identifying whether such Realized
Losses constituted Bankruptcy Losses and the aggregate
amount of Realized Losses incurred since the Closing Date;
(xii) the aggregate amount of Extraordinary Trust Fund
Expenses withdrawn from the Collection Account or the
Distribution Account for such Distribution Date;
(xiii) the aggregate Certificate Principal Balance of
each Class of Certificates, after giving effect to the
distributions, and allocations of Realized Losses, made on
such Distribution Date, separately identifying any reduction
thereof due to allocations of such Realized Losses;
(xiv) the Certificate Factor for each such Class of
Certificates applicable to such Distribution Date;
(xv) the Accrued Certificate Interest in respect of
the Class A Certificates, the Class A-IO Certificates and
the Subordinated Certificates for such Distribution Date and
the Unpaid Interest Shortfall Amount, if any, with respect
to each such Class of Certificates on such Distribution
Date, separately identifying any reduction thereof due to
allocations of Realized Losses, Prepayment Interest
Shortfalls and Relief Act Interest Shortfalls, as
applicable;
(xvi) the aggregate amount of any Prepayment Interest
Shortfall for such Distribution Date, to the extent not
covered by payments by the Servicer pursuant to Section
3.24;
(xvii) the aggregate amount of Relief Act Interest
Shortfalls for such Distribution Date;
(xviii) the Required Overcollateralized Amount and the
Credit Enhancement Percentage for such Distribution Date;
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(xix) the Overcollateralization Increase Amount, if
any, for such Distribution Date;
(xx) the Overcollateralization Reduction Amount, if
any, for such Distribution Date;
(xxi) with respect to any Mortgage Loan as to which
foreclosure proceedings have been concluded, the loan number
and unpaid principal balance of such Mortgage Loan as of the
date of such conclusion of foreclosure proceedings;
(xxii) with respect to Mortgage Loans as to which a
Liquidation Event has occurred, the number of such Mortgage
Loans, the unpaid principal balance of such Mortgage Loans
as of the date of such Liquidation Event and the amount of
proceeds (including Liquidation Proceeds and Insurance
Proceeds) collected in respect of such Mortgage Loans;
(xxiii) the respective Pass-Through Rates applicable
to the LIBOR Certificates, for such Distribution Date and
the Pass-Through Rate applicable to the LIBOR Certificates
for the immediately succeeding Distribution Date;
(xxiv) the amount of any payment made by the
Counterparty under the Yield Maintenance Agreement;
(xxv) the amount on deposit in the Pre-Funding Account
(including subsequent transfer amounts or amounts included
in the Principal Remittance Amount on July 15, 2002);
(xxvi) the amount of any Net Monthly Excess Cash Flow
on such Distribution Date and the allocation thereof to the
Certificateholders with respect to Applied Realized Loss
Amounts and Unpaid Realized Loss Amounts; and
(xxvii) whether a Trigger Event has occurred and is
continuing.
The Trustee will make such statement (and, at its option,
any additional files containing the same information in an alternative format)
available each month to Certificateholders, the Servicer, the Rating Agencies
and the Counterparty via the Trustee's internet website. All information from
which the Trustee makes such statement will be based solely on information
provided by the Servicer. The Trustee's internet website shall initially be
located at "http:\\xxx.xxxxxxx.xxx". Assistance in using the website can be
obtained by calling the Trustee's customer service desk at (000) 000-0000.
Parties that are unable to use the above distribution option are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Trustee shall have the right to change
the way such statements are distributed in order to make such distribution
more convenient and/or more accessible to the above parties and the Trustee
shall provide timely and adequate notification to all above parties regarding
any such changes.
In the case of information furnished pursuant to subclauses
(i) through (iii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.
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Within a reasonable period of time after the end of each
calendar year, upon written request or request by facsimile, the Trustee shall
furnish to each Person who at any time during the calendar year was a Holder
of a Regular Certificate a statement containing the information set forth in
subclauses (i) through (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 as from time to time are in
force.
On each Distribution Date, the Trustee shall forward to the
Depositor, each Holder of a Non-Offered Certificate, and the Servicer, a copy
of the reports forwarded to the Regular Certificateholders on such
Distribution Date and a statement setting forth the amounts, if any, actually
distributed with respect to the Residual Certificates, respectively, on such
Distribution Date.
Within a reasonable period of time after the end of each
calendar year, upon written request or request by facsimile, the Trustee shall
furnish to each Person who at any time during the calendar year was a Holder
of a Residual Certificate a statement setting forth the amount, if any,
actually distributed with respect to the Residual Certificates, as
appropriate, 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 prepared by the Trustee and
furnished to such Holders pursuant to the rules and regulations of the Code as
are in force from time to time.
The Trustee shall, upon request, furnish to each
Certificateholder, during the term of this Agreement, such periodic, special,
or other reports or information, whether or not provided for herein, as shall
be reasonable with respect to the Certificateholder, or otherwise with respect
to the purposes of this Agreement, all such reports or information to be
provided at the expense of the Certificateholder in accordance with such
reasonable and explicit instructions and directions as the Certificateholder
may provide. For purposes of this Section 4.02, the Trustee's duties are
limited to the extent that the Trustee receives timely reports as required
from the Servicer.
On each Distribution Date the Trustee shall provide
Bloomberg Financial Markets, L.P. ("Bloomberg") loan level data with respect
to all of the Mortgage Loans and CUSIP level factors for each Class of
Certificates as of such Distribution Date, using a format and media mutually
acceptable to the Trustee and Bloomberg. In addition if so requested by an
Originator, on each Distribution Date the Trustee shall provide to such
Originator and at the expense of such Originator, the loan level data with
respect to the Mortgage Loans originated by such Originator.
SECTION 4.03. Remittance Reports; P&I Advances.
(a) No later than four Business Days prior to each
Distribution Date, the Servicer shall deliver to the Trustee electronically
(or such other means as the Servicer and the Trustee may agree from time to
time) a Remittance Report with respect to each Mortgage Loan for the
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prior calendar month. In addition, no later than four Business Days prior to
each Distribution Date, the Servicer shall deliver to the Trustee delinquency
information with respect to each Mortgage Loan and P&I Advances including: (i)
the amount of P&I Advances to be made by the Servicer in respect of the
related Distribution Date, the aggregate amount of P&I Advances outstanding
after giving effect to such P&I Advances, and the aggregate amount of
Nonrecoverable P&I Advances in respect of such Distribution Date and (ii) such
other information with respect to the Mortgage Loans as the Trustee may
reasonably require to perform the calculations necessary to make the
distributions contemplated by Section 4.01 and to prepare the statements to
Certificateholders contemplated by Section 4.02. The Trustee shall not be
responsible to recompute, recalculate or verify any information provided to it
by the Servicer.
(b) The amount of P&I Advances to be made by the Servicer
for any Distribution Date shall equal, subject to Section 4.03(d), the sum of
(i) the aggregate amount of Monthly Payments (with each interest portion
thereof net of the Servicing Fee), due on the related Due Date in respect of
the Mortgage Loans, which Monthly Payments were Delinquent as of the close of
business on the related Determination Date, plus (ii) with respect to each REO
Property, which REO Property was acquired during or prior to the related
Prepayment Period and as to which such REO Property an REO Disposition did not
occur during the related Prepayment Period, an amount equal to the excess, if
any, of the Monthly Payments (with each interest portion thereof net of the
Servicing Fee) that would have been due on the related Due Date in respect of
the related Mortgage Loans, over the net income from such REO Property
transferred to the Distribution Account pursuant to Section 3.23 for
distribution on such Distribution Date; provided, however, that with respect
to any Balloon Loan that is Delinquent on its maturity date, the Servicer will
not be required to advance the related balloon payment but will be required to
continue to make advances in accordance with this Section 4.03 with respect to
such Balloon Loan in an amount equal to an assumed scheduled payment that
would otherwise be due based on the original amortization schedule for that
Mortgage Loan (with interest at the Mortgage Rate less the Servicing Fee
Rate).
On or before 1:00 p.m. New York time on the Servicer
Remittance Date, the Servicer shall remit in immediately available funds to
the Trustee for deposit in the Distribution Account an amount equal to the
aggregate amount of P&I Advances, if any, to be made in respect of the
Mortgage Loans and REO Properties for the related Distribution Date either (i)
from its own funds or (ii) from the Collection Account, to the extent of funds
held therein for future distribution (in which case, it will cause to be made
an appropriate entry in the records of the Collection Account that amounts
held for future distribution have been, as permitted by this Section 4.03,
used by the Servicer in discharge of any such P&I Advance) or (iii) in the
form of any combination of (i) and (ii) aggregating the total amount of P&I
Advances to be made by the Servicer with respect to the Mortgage Loans and REO
Properties. Any amounts held for future distribution and so used shall be
appropriately reflected in the Servicer's records and replaced by the Servicer
by deposit in the Collection Account on or before the next succeeding Servicer
Remittance Date. The Trustee will provide notice to the Servicer by telecopy
by the close of business on any Servicer Remittance Date in the event that the
amount remitted by the Servicer to the Trustee on such date is less than the
P&I Advances required to be made by the Servicer for such Distribution Date.
Nothing in this Section 4.03(b) shall be construed to prohibit the Servicer
from reimbursing itself at any time from the Collection Account to the extent
provided in Section 3.11 herein.
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(c) The obligation of the Servicer to make such P&I Advances
is mandatory, notwithstanding any other provision of this Agreement but
subject to (d) below, and, with respect to any Mortgage Loan or REO Property,
shall continue until a Final Recovery Determination in connection therewith or
the removal thereof from the Trust Fund pursuant to any applicable provision
of this Agreement, except as otherwise provided in this Section.
(d) Notwithstanding anything herein to the contrary, no P&I
Advance or Servicing Advance shall be required to be made hereunder by the
Servicer if such P&I Advance or Servicing Advance would, if made, constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance. The
determination by the Servicer that it has made a Nonrecoverable P&I Advance or
a Nonrecoverable Servicing Advance or that any proposed P&I Advance or
Servicing Advance, if made, would constitute a Nonrecoverable P&I Advance or a
Nonrecoverable Servicing Advance, respectively, shall be evidenced by an
Officers' Certificate of the Servicer delivered to the Depositor and the
Trustee.
SECTION 4.04. Allocation of Realized Losses.
(a) Prior to each Determination Date, the Servicer shall
determine as to each Mortgage Loan and REO Property: (i) the total amount of
Realized Losses, if any, incurred in connection with any Final Recovery
Determinations made during the related Prepayment Period; (ii) whether and the
extent to which such Realized Losses constituted Bankruptcy Losses and (iii)
the respective portions of such Realized Losses allocable to interest and
allocable to principal. Prior to each Determination Date, the Servicer shall
also determine as to each Mortgage Loan: (A) the total amount of Realized
Losses, if any, incurred in connection with any Deficient Valuations made
during the related Prepayment Period and (B) the total amount of Realized
Losses, if any, incurred in connection with Debt Service Reductions in respect
of Monthly Payments due during the related Due Period. The information
described in the two preceding sentences that is to be supplied by the
Servicer shall be evidenced by an Officers' Certificate delivered to the
Trustee by the Servicer prior to the Determination Date immediately following
the end of (x) in the case of Bankruptcy Losses allocable to interest, the Due
Period during which any such Realized Loss was incurred, and (y) in the case
of all other Realized Losses, the Prepayment Period during which any such
Realized Loss was incurred.
(b) Realized Losses on the Mortgage Loans shall be allocated
by the Trustee on each Distribution Date as follows: first, to Net Monthly
Excess Cashflow; and second, to the Class X Certificates, until the
Overcollateralized Amount thereof has been reduced to zero. Thereafter, any
Applied Realized Loss Amounts shall be allocated; first, to the Class B
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; second, to the Class M2 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; and third, to the Class M1
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero. All Realized Losses to be allocated to the Certificate Principal
Balances of all Classes on any Distribution Date shall be so allocated after
the actual distributions to be made on such date as provided above. All
references above to the Certificate Principal Balance of any Class of
Certificates shall be to the Certificate Principal Balance of such Class
immediately prior to the relevant Distribution Date, before reduction thereof
by any Realized Losses, in each case to be allocated to such Class of
Certificates, on such Distribution Date.
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Any allocation of Realized Losses to a Subordinated
Certificate on any Distribution Date shall be made by reducing the Certificate
Principal Balance thereof by the amount so allocated, or in the case of a
Class X Certificate, by reducing the amount otherwise payable in respect
thereof pursuant to Section 4.01(a)(3)(xv). No allocations of any Realized
Losses shall be made to the Certificate Principal Balances of the Class A
Certificates or the Class P Certificates. 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. 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. 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 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 does withhold any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate the amount withheld to
such Certificateholders.
SECTION 4.06. Commission Reporting.
Within 15 days after each Distribution Date, the Trustee
shall, in accordance with industry standards, file with the Commission via the
Electronic Data Gathering and Retrieval System, a Form 8-K with a copy of the
statement to Certificateholders for such Distribution Date as an exhibit
thereto. Prior to January 30, 2003, the Trustee shall in accordance with
industry standards file a Form 15 Suspension Notification with respect to the
Trust Fund, if applicable. Prior to March 30, 2003, the Trustee shall file a
Form 10-K, in substance conforming to industry standards, with respect to the
Trust Fund. The Depositor hereby grants to the Trustee a limited power of
attorney to execute and file each such document on behalf of the Depositor.
Such power of attorney shall continue until the earlier of (i) receipt by the
Trustee from the Depositor of written termination of such power of attorney
and (ii) the termination of the Trust Fund. The Depositor agrees to promptly
furnish to the Trustee, from time to time upon request, such further
information, reports and financial statements within its control related to
this Agreement and the Mortgage Loans as the Trustee reasonably deems
appropriate to prepare and file all necessary reports with the Commission. The
Trustee shall have no responsibility to file any items other than those
specified in this Section.
SECTION 4.07. Early Termination Fund.
(a) On the Closing Date, the Trustee shall establish and
maintain in its name, in trust for the benefit of the Holders of the Class X
Certificates, the Early Termination Fund. The Early Termination Fund shall be
an Eligible Account, and funds on deposit therein shall be held
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separate and apart from, and shall not be commingled with, any other moneys,
including without limitation, other moneys held by the Trustee pursuant to
this Agreement.
(b) On the Closing Date, $1,000 will be deposited by the
Depositor into the Early Termination Fund. On each Distribution Date, the
Trustee shall transfer from the Distribution Account to the Early Termination
Fund pursuant to Section 4.01(a)(3)(xvi) any amount required to be deposited
therein. Amounts on deposit in the Early Termination Fund can be withdrawn by
the Trustee and paid to the Counterparty to the extent of any Termination
Payments or Carryover Termination Payments owed by the Trust to the
Counterparty resulting solely from a default of the Trust under the Yield
Maintenance Agreement where the Trust is the sole affected party.
(c) Funds in the Early Termination Fund may be invested in
Eligible Investments by the Trustee at the direction of the holders of the
Class X Certificates maturing on or prior to the next succeeding Distribution
Date. Any net investment earnings on such amounts shall be payable to the
holders of the Class X Certificates. The Trustee shall account for the Early
Termination Fund as an outside reserve fund within the meaning of Treasury
regulation 1.860G-2(h) and not an asset of any REMIC created pursuant to this
Agreement. The Class X Certificates shall evidence ownership of the Early
Termination Fund for federal tax purposes and the Holders thereof shall direct
the Trustee in writing as to the investment of amounts therein. The Trustee
shall treat amounts transferred by REMIC V to the Early Termination Fund as
distributions to the Class X Certificateholder for all Federal tax purposes.
In the absence of such written direction, all funds in the Early Termination
Fund shall remain uninvested. The Trustee shall have no liability for losses
on investments in Eligible Investments made pursuant to the Section 4.07(c)
(other than as obligor on such investments). Upon termination of the Trust
Fund, any amounts remaining in the Early Termination Fund shall be distributed
to the Holders of the Class X Certificates.
(d) On the Distribution Date immediately after the
Distribution Date on which the Yield Maintenance Agreement is terminated, any
amounts on deposit in the Early Termination Fund not payable to the
Counterparty shall be distributed to the Holders of the Class X Certificates.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
(a) The Certificates in the aggregate will represent the
entire beneficial ownership interest in the Mortgage Loans and all other
assets included in the Trust Fund. The Certificates of each Class will be
substantially in the forms annexed hereto as Exhibits A-1 through A-9 and will
be issuable in registered form only. Each Certificate will share ratably in
all rights of the related Class.
The LIBOR Certificates are issuable only in minimum
denominations corresponding to minimum initial Certificate Principal Balances
of $50,000 and integral multiples of $1,000 in excess thereof, except that one
investor in each Class of such Certificates
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may hold a beneficial interest in that Class of Certificates that is not an
integral multiple of $1,000. The Class P Certificates are issuable only in
minimum denominations corresponding to minimum initial Certificate Principal
Balances of $20 and integral multiples of $20 thereof. The Class X
Certificates are issuable only in minimum denominations corresponding to a
minimum initial Notional Amount of $100,000 and integral multiples of $1,000
in excess thereof. The Class A-IO and Class B-IO Certificates are each
issuable only in minimum denominations corresponding to the respective minimal
initial Notional Amount of $100,000 and integral multiples of $1,000 in excess
thereof, except that one investor in the Class A-IO Certificates may hold a
beneficial interest in the Class A-IO Certificates that is not an intergral
multiple of $1,000. The Residual Certificates are issuable in minimum
denominations corresponding to minimum Percentage Interests of 20% and
multiples thereof.
Upon original issue, the Certificates shall be executed and
delivered by the Trustee and the Trustee shall cause the Certificates to be
authenticated by the Certificate Registrar to or upon the order of the
Depositor. The Certificates shall be executed and attested by manual or
facsimile signature on behalf of the Trustee by an authorized signatory.
Certificates bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the 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 herein executed by the Certificate
Registrar by manual signature, and such certificate of authentication shall be
conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder. All Certificates shall be dated
the date of their authentication.
(b) The Offered Certificates shall initially be issued as
one or more Certificates held by the Book-Entry Custodian or, if appointed to
hold such Certificates as provided below, the Depository and 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 such Certificates
through the book-entry facilities of the Depository and, except as provided
below, shall not be entitled to definitive, fully registered Certificates
("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 only transfer the
Ownership Interests 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 is hereby initially appointed
as the Book-Entry Custodian and hereby agrees to act as such in accordance
herewith and in accordance with the agreement that it has with the Depository
authorizing it to act as such. The Book-Entry Custodian may, and if it is no
longer qualified to act as such, the Book-Entry Custodian shall, appoint, by a
written instrument delivered to the Depositor, the Servicer, the Trustee (if
the Trustee is not the Book-Entry Custodian) and any other transfer agent
(including the Depository or any successor Depository) to act as Book-Entry
Custodian under such conditions as the predecessor Book-Entry Custodian
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and the Depository or any successor Depository may prescribe, provided that
the predecessor Book-Entry Custodian shall not be relieved of any of its
duties or responsibilities by reason of any such appointment of other than the
Depository. If the Trustee resigns or is removed in accordance with the terms
hereof, the successor trustee or, if it so elects, the Depository shall
immediately succeed to its predecessor's duties as Book-Entry Custodian. The
Depositor shall have the right to inspect, and to obtain copies of, any
Certificates held as Book-Entry Certificates by the Book-Entry Custodian.
The Trustee, the Servicer and the Depositor may for all
purposes (including the making of payments due on the Book-Entry Certificates)
deal with the Depository as the authorized representative of the Certificate
Owners with respect to the Book-Entry Certificates for the purposes of
exercising the rights of Certificateholders hereunder. The rights of
Certificate Owners with respect to the 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 the 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, (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the
Depository or (iii) after the occurrence of a Servicer Event of Default,
Certificate Owners representing in the aggregate not less than 51% of the
Ownership Interests of the Book-Entry Certificates advise the Trustee through
the Depository, in writing, that the continuation of a book-entry system
through the Depository is no longer in the best interests of the Certificate
Owners, 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 Book-Entry
Custodian or the Depository, as applicable, accompanied by registration
instructions from the Depository for registration of transfer, the Trustee
shall issue the Definitive Certificates. Such Definitive Certificates will be
issued in minimum denominations of $50,000, except that any beneficial
ownership that was represented by a Book-Entry Certificate in an amount less
than $50,000 immediately prior to the issuance of a Definitive Certificate
shall be issued in a minimum denomination equal to the amount represented by
such Book-Entry Certificate. None of the Depositor, the Servicer or the
Trustee shall be liable for any delay in the delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates all references
herein to obligations imposed upon or to be performed by the Depository shall
be deemed to be imposed upon and performed by the Trustee, to the extent
applicable with respect to such Definitive Certificates, and the Trustee shall
recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.
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SECTION 5.02. Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at one of the offices
or agencies to be appointed by the Trustee in accordance with the provisions
of Section 8.12 a Certificate Register for the Certificates in which, subject
to such reasonable regulations as it may prescribe, the Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee will initially serve as
Certificate Registrar for the purpose of registering Certificates and
transfers and exchanges of Certificates as herein provided. The Certificate
Registrar may appoint, by a written instrument delivered to the Trustee, the
Servicer and the Depositor, any other bank or trust company to act as
Certificate Registrar under such conditions as the predecessor Certificate
Registrar may prescribe, provided that the predecessor Certificate Registrar
shall not be relieved of any of its duties or responsibilities hereunder by
reason of such appointment. If the Trustee shall at any time not be the
Certificate Registrar, the Trustee shall have and maintain the right to
inspect the Certificate Register or to obtain a copy thereof at all reasonable
times, and to rely conclusively upon a certificate of the Certificate
Registrar as to the information set forth in the Certificate Register.
(b) No transfer of any Class X Certificate, Class B-IO
Certificates, Class P Certificate or Residual Certificate shall be made unless
that transfer is made pursuant to an effective registration statement under
the Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is
made in a transaction that does not require such registration or
qualification. In the event that such a transfer of a Class X Certificate,
Class B-IO Certificates, Class P Certificate or Residual Certificate is to be
made without registration or qualification (other than in connection with the
initial transfer of any such Certificate by the Depositor to the Seller or by
the Seller to an affiliate of the Seller or to a trust, the depositor of which
is an affiliate of the Seller), the Trustee and the Certificate Registrar
shall each require receipt of: either (i) written certifications from the
Certificateholder desiring to effect the transfer and from such
Certificateholder's prospective transferee, substantially in the forms
attached hereto as Exhibit F-1 or (ii) an Opinion of Counsel satisfactory to
it that such transfer may be made without such registration or qualification
(which Opinion of Counsel shall not be an expense of the Depositor, the
Trustee, the Servicer, the Certificate Registrar or the Trust Fund). None of
the Depositor, the Certificate Registrar or the Trustee is obligated to
register or qualify the Class X Certificates, Class B-IO Certificates, the
Class P Certificates or the Residual Certificates under the 1933 Act or any
other securities laws or to take any action not otherwise required under this
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Certificateholder desiring to effect the transfer of a
Class X Certificate, a Class B-IO Certificate, a Class P Certificate or a
Residual Certificate shall, and does hereby agree to, indemnify the Trustee,
the Depositor, the Certificate Registrar and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
(c) (i) No transfer of a Class X Certificate, a Class B-IO
Certificate, Class P Certificate or Residual Certificate or any interest
therein shall be made to any Plan, any Person acting, directly or indirectly,
on behalf of any such Plan or any Person (other than in connection with the
initial transfer of any such Certificate by the Depositor to the Seller or by
the Seller to an affiliate of the Seller or to a trust, the depositor of which
is an affiliate of the Seller) acquiring such Certificates with "plan assets"
of a Plan within the meaning of the Department of Labor
108
regulation promulgated at 29 C.F.R. ss. 2510.3-101 ("Plan Assets") or as
determined under other applicable law, and each transferee of a Class X
Certificate, Class B-IO Certificate, Class P Certificate or Residual
Certificate shall be required to certify (in the form attached hereto as
Exhibit G or Exhibit F-2, as applicable) that a transfer of such Certificate
will not violate the foregoing limitation, unless the Depositor, the Trustee and
the Servicer are provided with either (i) an Opinion of Counsel which
establishes to the satisfaction of the Depositor, the Trustee and the Servicer
that the purchase of such Certificates is permissible under applicable law,
will not constitute or result in any prohibited transaction under ERISA or
Section 4975 of the Code and will not subject the Depositor, the Servicer, the
Trustee or the Trust Fund to any obligation or liability (including
obligations or liabilities under ERISA or Section 4975 of the Code) in
addition to those undertaken in this Agreement, which Opinion of Counsel shall
not be an expense of the Depositor, the Servicer, the Trustee or the Trust
Fund. Neither an Opinion of Counsel nor any certification will be
required in connection with the initial transfer of any such Certificate by
the Depositor to an affiliate of the Depositor (in which case, the Depositor
or any affiliate thereof shall be deemed to have represented that such
affiliate is not a Plan or a Person investing Plan Assets) 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.
(ii) No transfer of a Class A, Class A-IO, Class M-1, Class
M-2 or Class B Certificate or any interest therein shall be made to any Plan,
any Person acting, directly or indirectly on behalf of any Plan or any Person
acquiring such Certificates with "Plan Assets" of a Plan unless such Plan is a
Qualified Plan Investor. Each Person that acquires a Class A, Class A-IO,
Class M-1, Class M-2 or Class B Certificate that is a Book Entry Certificate
will be deemed to represent that either (a) it is not a Plan or a Person
acting, directly or indirectly, on behalf of a Plan, and is not acquiring the
Certificates with "plan assets" of a Plan, or (b) it, or each Plan on behalf
of which it is acquiring a Certificate or an interest therein, is a Qualified
Plan Investor.
(iii) If any Certificate or any interest therein is acquired
or held in violation of the provisions of Section 5.02(c)(i) or (ii), the next
preceding permitted beneficial owner will be treated as the beneficial owner
of that Certificate retroactive to the date of transfer to the purported
beneficial owner. Any purported beneficial owner whose acquisition or holding
of any such Certificate or interest therein was effected in violation of the
provisions of the preceding paragraph shall indemnify and hold harmless the
Depositor, the Servicer, the Trustee, the Certificate Registrar, the
Underwriters and the Trust Fund from and against any and all liabilities,
claims, costs or expenses incurred by those parties as a result of that
acquisition or holding.
(d) (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:
109
(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 an
affidavit and agreement (a "Transfer Affidavit and
Agreement"), in the form attached hereto as Exhibit F-2 from
the proposed Transferee, representing and warranting, among
other things, that such Transferee is a Permitted
Transferee, that it is not acquiring its Ownership Interest
in the Residual Certificate that is the subject of the
proposed Transfer as a nominee, trustee or agent for any
Person that is not a Permitted Transferee, that for so long
as it retains its Ownership Interest in a Residual
Certificate, it will endeavor to remain a Permitted
Transferee, and that it has reviewed the provisions of this
Section 5.02(d) and agrees to be bound by them.
(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
who is 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 in the form
attached hereto as Exhibit F-2 ) 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 Transferor Affidavit
(in the form attached hereto as Exhibit F-2) to the Trustee
stating that, among other things, it has no actual knowledge
that such other Person is not a Permitted Transferee.
(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 regulation
Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an
Ownership Interest in a Residual Certificate, if it is, or
is holding an Ownership Interest in a Residual Certificate
on behalf of, a "pass-through interest holder."
(ii) The Trustee will register the Transfer of any Residual
Certificate only if it shall have received the Transfer Affidavit and
Agreement and all of such other documents as shall have been reasonably
required by the Trustee as a condition to such registration. In addition, no
Transfer of a Residual Certificate shall be made unless the Trustee shall have
received a representation letter from the Transferee of such Certificate to
the effect that such Transferee is a Permitted Transferee.
110
(iii) (A) If any purported Transferee shall become a Holder of
a Residual Certificate in violation of the provisions of this Section 5.02(d),
then the last preceding Permitted Transferee shall be restored, to the extent
permitted by law, to all rights 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(d) 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(d) 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 or any Affiliate of the
Trustee. The proceeds of such sale, net of the
commissions (which may include commissions payable to
the Trustee or its Affiliates), 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 described in Treasury
regulations sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to the
"excess inclusions" of such Residual Certificate and (B) as a result of any
regulated investment company, real estate investment trust, common trust fund,
partnership, trust, estate or organization described in Section 1381 of the
Code that holds an Ownership Interest in a Residual Certificate having as
among its record holders at any time any Person which is a Disqualified
Organization. Such information shall be provided by the Trustee upon receipt
of reasonable compensation.
(v) The provisions of this Section 5.02(d) set forth prior to
this subsection (v) may be modified, added to or eliminated, provided that
there shall have been delivered to the Trustee and the Certificate Registrar
at the expense of the party seeking to modify, add to or eliminate any such
provision the following:
(A) written notification from each Rating Agency to
the effect that the modification, addition to or elimination
of such provisions will not cause such
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Rating Agency to downgrade its then-current ratings of any
Class of Certificates; and
(B) an Opinion of Counsel, in form and substance
satisfactory to the Trustee and the Certificate Registrar,
to the effect that such modification of, addition to or
elimination of such provisions will not cause any REMIC
created hereunder to cease to qualify as a REMIC and will
not cause any REMIC created hereunder, as the case may be,
to be subject to an entity-level tax caused by the Transfer
of any Residual Certificate to a Person that is not a
Permitted Transferee or (y) a Person other than the
prospective transferee to be subject to a REMIC-tax caused
by the Transfer of a Residual Certificate to a Person that
is not a Permitted Transferee.
(e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose pursuant to Section 8.12, the Trustee
shall execute and the Certificate Registrar 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.
(f) At the option of the Holder thereof, any Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Trustee maintained
for such purpose pursuant to Section 8.12. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute and the Certificate
Registrar shall 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 satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder thereof or his attorney
duly authorized in writing.
(g) No service charge to the Certificateholders shall be
made for any transfer or exchange of Certificates, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Certificate Registrar in accordance
with its customary procedures.
(i) The Trustee will cause the Certificate Registrar (unless
the Trustee is acting as Certificate Registrar) to provide notice to the
Trustee of each transfer of a Certificate and to provide the Trustee with an
updated copy of the Certificate Registrar on the first Business Day in May of
each year, commencing in May 2003.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen
Certificates.
If (i) any mutilated Certificate is surrendered to the
Trustee or the Certificate Registrar, or the Trustee and the Certificate
Registrar receive evidence to their satisfaction of the destruction, loss or
theft of any Certificate, and (ii) there is delivered to the Trustee and the
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Certificate Registrar such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of actual knowledge by the
Trustee or the Certificate Registrar that such Certificate has been acquired
by a bona fide purchaser, the Trustee shall execute and the Certificate
Registrar shall deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of the same Class and
of like denomination 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 Certificate Registrar) connected therewith. Any replacement Certificate
issued pursuant to this Section shall constitute complete and indefeasible
evidence of ownership in the applicable REMIC created hereunder, 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 Servicer, the Trustee, the Certificate
Registrar 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 none of the Depositor, the Servicer, the Trustee, the
Certificate Registrar or any agent of any of them shall be affected by notice
to the contrary.
SECTION 5.05. Certain Available Information.
On or prior to the date of the first sale of any Class X
Certificate, Class B-IO, Class P Certificate or Residual Certificate to an
Independent third party, the Depositor shall provide to the Trustee ten copies
of any private placement memorandum or other disclosure document used by the
Depositor in connection with the offer and sale of such Certificates. In
addition, if any such private placement memorandum or disclosure document is
revised, amended or supplemented at any time following the delivery thereof to
the Trustee, the Depositor promptly shall inform the Trustee of such event and
shall deliver to the Trustee ten copies of the private placement memorandum or
disclosure document, as revised, amended or supplemented. The Trustee shall
maintain at its Corporate Trust Office and shall make available free of charge
during normal business hours for review by any Holder of a Certificate or any
Person identified to the Trustee as a prospective transferee of a Certificate,
originals or copies of the following items: (i) in the case of a Holder or
prospective transferee of a Class X Certificate, a Class B-IO Certificate, a
Class P Certificate or a Residual Certificate, the related private placement
memorandum or other disclosure document relating to such Certificates, if any,
in the form most recently provided to the Trustee; and (ii) in all cases, (A)
this Agreement and any amendments hereof entered into pursuant to Section
11.01, (B) all monthly statements required to be delivered to
Certificateholders of the relevant Class pursuant to Section 4.02 since the
Closing Date, and all other notices, reports, statements and written
communications delivered to the Certificateholders of the relevant Class
pursuant to this Agreement since the Closing Date, (C) all certifications
delivered by a Responsible Officer of the Trustee since the Closing Date
pursuant to Section 10.01(h), (D) any and all Officers' Certificates delivered
to the Trustee by the Servicer since the Closing Date to evidence the
Servicer's determination that any P&I Advance was, or if made, would be a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance, respectively,
and (E) any and all Officers' Certificates delivered to the
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Trustee by the Servicer since the Closing Date pursuant to Section 4.04(a).
Copies and mailing of any and all of the foregoing items will be available
from the Trustee upon request at the expense of the person requesting the
same.
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Liability of the Depositor and the Servicer.
The Depositor and the Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically imposed by this
Agreement and undertaken hereunder by the Depositor and the Servicer herein.
SECTION 6.02. Merger or Consolidation of the Depositor or
the Servicer.
Subject to the following paragraph, the Depositor will keep
in full effect its existence, rights and franchises as a corporation under the
laws of the jurisdiction of its incorporation. Subject to the following
paragraph, the Servicer will keep in full effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and its qualification as an approved conventional
seller/servicer for Xxxxxx Xxx or Xxxxxxx Mac in good standing. The Depositor
and the Servicer 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.
The Depositor or the Servicer may be merged or consolidated
with or into any Person, or transfer all or substantially all of its assets to
any Person, in which case any Person resulting from any merger or
consolidation to which the Depositor or the Servicer shall be a party, or any
Person succeeding to the business of the Depositor or the Servicer, shall be
the successor of the Depositor or the 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 Servicer
shall be a servicer of Mortgage Loans on behalf of Xxxxxx Mae or Xxxxxxx Mac;
and provided further that the Rating Agencies' ratings of the Certificates in
effect immediately prior to such merger or consolidation will not be
qualified, reduced or withdrawn as a result thereof (as evidenced by a letter
to such effect from the Rating Agencies).
SECTION 6.03. Limitation on Liability of the Depositor, the
Servicer and Others.
None of the Depositor, the Servicer or any of the directors,
officers, employees or agents of the Depositor or the 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, the Servicer or any such person against any
breach of warranties, representations or covenants made herein, or against any
specific liability imposed on
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the Servicer pursuant hereto, or against any liability which would otherwise
be imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor or the Servicer may rely in good faith on
any document of any kind which, prima facie, is properly executed and
submitted by any Person respecting any matters arising hereunder. The
Depositor, the Servicer and any director, officer, employee or agent of the
Depositor or the Servicer shall be indemnified and held harmless by the Trust
Fund against any loss, liability or expense incurred in connection with any
legal action relating to this Agreement or the Certificates, other than any
loss, liability or expense relating 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 any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor the Servicer shall
be under any obligation to appear in, prosecute or defend any legal action
unless such action is related to its respective duties under this Agreement
and, in its opinion, does not involve it in any expense or liability;
provided, however, that each of the Depositor and the Servicer may in its
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, unless
the Depositor or the Servicer acts without the consent of Holders of
Certificates entitled to at least 51% of the Voting Rights (which consent
shall not be necessary in the case of litigation or other legal action by
either to enforce their respective rights or defend themselves hereunder), the
legal expenses and costs of such action and any liability resulting therefrom
(except any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder) shall be
expenses, costs and liabilities of the Trust Fund, and the Depositor and the
Servicer shall be entitled to be reimbursed therefor from the Collection
Account as and to the extent provided in Section 3.11, any such right of
reimbursement being prior to the rights of the Certificateholders to receive
any amount in the Collection Account.
SECTION 6.04. Limitation on Resignation of the Servicer.
The Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that its duties
hereunder are no longer permissible under applicable law or (ii) with the
written consent of the Trustee and written confirmation from each Rating
Agency (which confirmation shall be furnished to the Depositor and the
Trustee) that such resignation will not cause such Rating Agency to reduce the
then current rating of the Offered Certificates. Any such determination
pursuant to clause (i) of the preceding sentence permitting the resignation of
the Servicer shall be evidenced by an Opinion of Counsel to such effect
obtained at the expense of the Servicer and delivered to the Trustee. No
resignation of the Servicer shall become effective until the Trustee or a
successor servicer shall have assumed the Servicer's responsibilities, duties,
liabilities (other than those liabilities arising prior to the appointment of
such successor) and obligations under this Agreement.
Except as expressly provided herein and in Section 3.28, the
Servicer shall not assign or transfer any of its rights, benefits or
privileges hereunder to any other Person, nor delegate to or subcontract with,
nor authorize or appoint any other Person to perform any of the
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duties, covenants or obligations to be performed by the Servicer hereunder.
The foregoing prohibition on assignment shall not prohibit the Servicer from
designating a Sub-Servicer as payee of any indemnification amount payable to
the Servicer hereunder; provided, however, that as provided in Section 3.06
hereof, no Sub-Servicer shall be a third-party beneficiary hereunder and the
parties hereto shall not be required to recognize any Sub-Servicer as an
Indemnitee under this Agreement. If, pursuant to any provision hereof, the
duties of the Servicer are transferred to a successor Servicer, the entire
amount of the Servicing Fee and other compensation payable to the Servicer
pursuant hereto shall thereafter be payable to such successor Servicer.
SECTION 6.05. Rights of the Depositor in Respect of the
Servicer.
The Servicer shall afford (and any Sub-Servicing Agreement
shall provide that each Sub-Servicer shall afford) the Depositor and the
Trustee, upon reasonable notice, during normal business hours, access to all
records maintained by the Servicer (and any such Sub-Servicer) in respect of
the Servicer's rights and obligations hereunder and access to officers of the
Servicer (and those of any such Sub-Servicer) responsible for such
obligations. Upon request, the Servicer shall furnish to the Depositor and the
Trustee its (and any such Sub-Servicer's) most recent financial statements and
such other information relating to the Servicer's capacity to perform its
obligations under this Agreement that it possesses. To the extent such
information is not otherwise available to the public, the Depositor and the
Trustee shall not disseminate any information obtained pursuant to the
preceding two sentences without the Servicer's (or any such Sub-Servicer's)
written consent, except as required pursuant to this Agreement or to the
extent that it is necessary to do so (i) in working with legal counsel,
auditors, taxing authorities or other governmental agencies, rating agencies
or reinsurers or (ii) pursuant to any law, rule, regulation, order, judgment,
writ, injunction or decree of any court or governmental authority having
jurisdiction over the Depositor, the Trustee or the Trust Fund, and in either
case, the Depositor or the Trustee, as the case may be, shall use its best
efforts to assure the confidentiality of any such disseminated non-public
information. The Depositor may, but is not obligated to, enforce the
obligations of the Servicer under this Agreement and may, but is not obligated
to, perform, or cause a designee to perform, any defaulted obligation of the
Servicer under this Agreement or exercise the rights of the Servicer under
this Agreement; provided that the Servicer shall not be relieved of any of its
obligations under this Agreement by virtue of such performance by the
Depositor or its designee. The Depositor shall not have any responsibility or
liability for any action or failure to act by the Servicer and is not
obligated to supervise the performance of the Servicer under this Agreement or
otherwise.
ARTICLE VII
DEFAULT
SECTION 7.01. Servicer Events of Default.
(a) "Servicer Event of Default," means any one of the
following events with respect to the Servicer:
(i) any failure by the Servicer to remit to the
Trustee for distribution to the Certificateholders any
payment (other than Advances that are required to be made
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from its own funds) which continues unremedied for a period
of one Business Day after the date upon which written notice
of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Depositor or the
Trustee, or to the Servicer, the Depositor and the Trustee
by the Holders of Certificates entitled to at least 25% of
the Voting Rights; or
(ii) any failure on the part of the Servicer duly to
observe or perform in any material respect any of the
covenants or agreements on the part of the Servicer
contained this Agreement which continues unremedied for a
period of 45 days after the earlier of (x) the date on which
written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the
Depositor or the Trustee, or to the Servicer, the Depositor
and the Trustee by the Holders of Certificates entitled to
at least 25% of the Voting Rights and (y) actual knowledge
of such failure by a Servicing Officer of the Servicer; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in
an involuntary case under any present or future federal or
state bankruptcy, insolvency or similar law or the
appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceeding, or for the winding-up
or liquidation of its affairs, shall have been entered
against the Servicer and if such proceeding is being
contested by the Servicer in good faith, such decree or
order shall have remained in force undischarged or unstayed
for a period of 60 days or results in the entry of an order
for relief or any such adjudication or appointment; or
(iv) the Servicer shall consent to the appointment of
a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities
or similar proceedings of or relating to it or of or
relating to all or substantially all of its property; or
(v) the Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit
of its creditors, or voluntarily suspend payment of its
obligations;
(vi) any failure by the Servicer of the Servicer
Termination Test; or
(vii) any failure of the Servicer to make any P&I
Advance on the Servicer Remittance Date required to be made
from its own funds pursuant to Section 4.03 which continues
unremedied until 3:00 p.m. New York time on the Business Day
immediately following the date upon which written notice of
such failure, requiring the same to be remedied, has been
given to the Servicer by the Depositor or the Trustee (in
which case notice shall be provided by telecopy).
If a Servicer Event of Default described in clauses (i)
through (v) or clause (vii) of this Section shall occur, then, and in each and
every such case, so long as a Servicer Event of
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Default shall not have been remedied, the Depositor or the Trustee may, and at
the written direction of the Holders of Certificates entitled to at least 51%
of Voting Rights, the Trustee shall, by notice in writing to the Servicer (and
to the Depositor if given by the Trustee or to the Trustee if given by the
Depositor), terminate all of the rights and obligations of the Servicer in its
capacity as the Servicer under this Agreement, to the extent permitted by law,
and in and to the Mortgage Loans and the proceeds thereof. If a Servicer Event
of Default described in clause (vi) hereof shall occur, the Trustee shall, by
notice in writing to the Servicer, the Depositor and the Trustee, terminate
all of the rights and obligations of the Servicer in its capacity as the
Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof.
(b) [reserved].
(c) On or after the receipt by the Servicer of such written
notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Certificates (other than as a Holder of any Certificate)
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, as attorney-in-fact or otherwise, to execute
and deliver on behalf of and at the expense of the Servicer, 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. The defaulting
Servicer agrees, at its sole cost and expense, promptly (and in any event no
later than ten Business Days subsequent to such notice) to provide the Trustee
with all documents and records requested by it to enable it to assume the
Servicer's functions under this Agreement, and to cooperate with the Trustee
in effecting the termination of the Servicer's responsibilities and rights
under this Agreement, including, without limitation, the transfer within one
Business Day to the Trustee for administration by it of all cash amounts which
at the time shall be or should have been credited by the Servicer to the
Collection Account held by or on behalf of the Servicer, the Distribution
Account or any REO Account or Servicing Account held by or on behalf of the
Servicer or thereafter be received with respect to the Mortgage Loans or any
REO Property. For purposes of this Section 7.01, the Trustee shall not be
deemed to have knowledge of a Servicer Event of Default unless a Responsible
Officer of the Trustee assigned to and working in the Corporate Trust Office
has actual knowledge thereof or unless written notice of any event which is in
fact such a Servicer Event of Default is received by the Trustee and such
notice references the Certificates, the Trust Fund or this Agreement.
The Trustee shall be entitled to be reimbursed by the
defaulting Servicer (or by the Trust Fund if such Servicer is unable to
fulfill its obligations hereunder) for all costs associated with the transfer
of servicing from the predecessor Servicer (or if the predecessor Servicer is
the Trustee, from the Servicer immediately preceding the Trustee), including
without limitation, any costs or expenses associated with the complete
transfer of all servicing data and the completion, correction or manipulation
of such servicing data as may be required by the Trustee to correct any errors
or insufficiencies in the servicing data or otherwise to enable the Trustee to
service the Mortgage Loans properly and effectively, upon presentation of
reasonable documentation of such costs and expenses.
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SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of
termination, the Trustee shall be the successor in all respects to the
Servicer in its capacity as the Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto and arising
thereafter placed on the Servicer (except for any representations or
warranties of the Servicer under this Agreement, the responsibilities, duties
and liabilities contained in Section 2.03(b) and its obligation to deposit
amounts in respect of losses pursuant to Section 3.12) by the terms and
provisions hereof including, without limitation, the Servicer's obligations to
make P&I Advances pursuant to Section 4.03; provided, however, that if the
Trustee is prohibited by law or regulation from obligating itself to make
advances regarding Delinquent Mortgage Loans, then the Trustee shall not be
obligated to make P&I Advances pursuant to Section 4.03; and provided further,
that any failure to perform such duties or responsibilities caused by the
Servicer's failure to provide information required by Section 7.01 shall not
be considered a default by the Trustee as successor to the Servicer hereunder;
provided, however, it is understood and acknowledged by the parties that there
will be a period of transition (not to exceed 90 days) before the servicing
transfer is fully effected, during which time the terminated Servicer shall
continue all servicing (other than making any required Advance, which the
Trustee shall be required to do, subject to the limitations of this sentence)
of the Mortgage Loans. As compensation therefor, the Trustee shall be entitled
to the Servicing Fee and all funds relating to the Mortgage Loans to which the
Servicer would have been entitled if it had continued to act hereunder (other
than amounts which were due or would become due to the Servicer prior to its
termination or resignation). Notwithstanding anything herein to the contrary,
in no event shall the Trustee be liable for any Servicing Fee or for any
differential in the amount of the Servicing Fee paid hereunder and the amount
necessary to induce any successor Servicer to act as successor Servicer under
this Agreement and the transactions set forth or provided for herein.
Notwithstanding the above and subject to the next paragraph, the Trustee
shall, if it is unable to so act or if it is prohibited by law from making
advances regarding Delinquent Mortgage Loans, or if the Holders of
Certificates entitled to at least 51% of the Voting Rights so request in
writing to the Trustee, promptly appoint or petition a court of competent
jurisdiction to appoint, an established Mortgage Loan servicing institution
acceptable to each Rating Agency, having a net worth of not less than
$15,000,000 as the successor to the defaulting Servicer under this Agreement
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer under this Agreement. No appointment of a
successor to the Servicer under this Agreement shall be effective until the
assumption by the successor of all of the Servicer's responsibilities, duties
and liabilities hereunder. In connection with such appointment and assumption
described herein, the Trustee may make such arrangements for the compensation
of such successor out of payments on Mortgage Loans as it and such successor
shall agree; provided, however, that no such compensation shall be in excess
of that permitted the Servicer as such hereunder. The Depositor, the Trustee
and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession. Pending appointment of a
successor to the defaulting Servicer under this Agreement, the Trustee shall
act in such capacity as hereinabove provided.
Upon removal or resignation of the Servicer, the Trustee,
with the cooperation of the Depositor, (x) may solicit bids for a successor
Servicer as described below and (y) pending
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the appointment of a successor Servicer as a result of soliciting such bids,
shall serve as Servicer of the Mortgage Loans serviced by such predecessor
Servicer. The Trustee may solicit bids from housing and home finance
institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above (including the Trustee or any affiliate
thereof). Such successor Servicer shall be entitled to the servicing
compensation agreed upon between the Trustee, the successor Servicer and the
Depositor; provided, however, that no such fee shall exceed the Servicing Fee.
The Trustee upon receipt of the purchase price shall pay such purchase price
to the Servicer being so removed, after deducting from any sum received by the
Trustee from the successor to the Servicer in respect of such sale, transfer
and assignment all costs and expenses of any sale, transfer and assignment of
the servicing rights and responsibilities reasonably incurred hereunder. After
such deductions, the remainder of such sum shall be paid by the Trustee to the
defaulting Servicer at the time of such sale.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of the Servicer pursuant to Section
7.01 above or any appointment of a successor to the Servicer pursuant to
Section 7.02 above, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register.
(b) Not later than the later of 60 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time or
both, would constitute a Servicer Event of Default or five days after a
Responsible Officer of the Trustee becomes aware of the occurrence of such an
event, the Trustee shall transmit by mail to all Holders of Certificates
notice of each such occurrence, unless such default or Servicer Event of
Default shall have been cured or waived.
SECTION 7.04. Waiver of Servicer Events of Default.
The Holders representing at least 66% of the Voting Rights
evidenced by all Classes of Certificates affected by any default or Servicer
Event of Default hereunder may waive such default or Servicer Event of
Default; provided, however, that a default or Servicer Event of Default under
clause (i) or (vii) of Section 7.01 may be waived only by all of the Holders
of the Regular Certificates. Upon any such waiver of a default or Servicer
Event of Default, such default or Servicer 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 Servicer
Event of Default or impair any right consequent thereon except to the extent
expressly so waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Event of
Default and after the curing of all Servicer Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. During a Servicer
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Event of Default, 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 person would exercise or use under the
circumstances in the conduct of such person's own affairs. Any permissive
right of the Trustee enumerated in this Agreement shall not be construed as a
duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to it which are specifically required to be furnished pursuant to
any provision of this Agreement, shall examine them to determine whether they
conform to 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 its satisfaction, it will
provide notice thereof to the Certificateholders.
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 misconduct; provided, however, that:
(i) Prior to the occurrence of a Servicer Event of
Default, and after the curing of all such Servicer 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 it that conform to the
requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Trustee, unless it
shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) The Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken
by it in good faith in accordance with the direction of the
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.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may request and rely conclusively upon
and shall be fully protected in acting or refraining from
acting 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
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document reasonably believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any
Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with
such Opinion of Counsel;
(iii) The Trustee shall not be under any obligation to
exercise any of the trusts or powers vested in it by 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
provisions of this Agreement, unless such Certificateholders
shall have offered to it security or indemnity satisfactory
to it 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 a Servicer Event of Default (which has not
been cured or waived), 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
person would exercise or use under the circumstances in the
conduct of such person's own affairs;
(iv) The Trustee shall not be personally liable for
any action taken, suffered or omitted by it in good faith
and believed by it to be authorized or within the discretion
or rights or powers conferred upon it by this Agreement;
(v) Prior to the occurrence of a Servicer Event of
Default hereunder and after the curing of all Servicer
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, not reasonably assured to the
Trustee by such Certificateholders, the Trustee may require
reasonable indemnity against such expense, or liability from
such Certificateholders as a condition to taking any such
action;
(vi) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents custodians, nominees or
attorneys and shall not be responsible for any willful
misconduct or negligence of such agents, custodians,
nominees or attorneys (as long as such agents, custodians,
nominees or attorneys are appointed with due and proper
care);
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(vii) The Trustee shall not be personally liable for
any loss resulting from the investment of funds held in the
Collection Account at the direction of the Servicer pursuant
to Section 3.12; and
(viii) Except as otherwise expressly provided herein,
none of the provisions of this Agreement shall require the
Trustee to expend or risk its own funds or otherwise to
incur any liability, financial or otherwise, in the
performance of any of its duties hereunder, or in the
exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such
funds or indemnity satisfactory to it against such risk or
liability is not assured to it (not including expenses,
disbursements and advances incurred or made by the Trustee,
including the compensation and the expenses and
disbursements of its agents and counsel, in the ordinary
course of its performance in accordance with the provisions
of this Agreement.)
(b) All rights of action under this Agreement or under any
of the Certificates, enforceable by the Trustee, may be enforced by it without
the possession of any of the Certificates, or the production thereof at the
trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of such Certificates, subject to the provisions of
this Agreement.
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 Certificate
Registrar on the Certificates, the acknowledgments of the Trustee contained in
Article II and the representations and warranties of the Trustee in Section
8.13) shall be taken as the statements of the Depositor and the Trustee does
not assume any 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 8.13) or of the
Certificates (other than the signature of the Trustee and authentication of
the Certificate Registrar on the Certificates) or of any Mortgage Loan 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 Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual capacity or any other capacity
may become the owner or pledgee of Certificates with the same rights it would
have if it were not Trustee.
SECTION 8.05. Fees and Expenses of the Trustee.
(a) As compensation for its duties hereunder, the Trustee
shall withdraw from the Distribution Account on each Distribution Date all
income and gains (net of losses) on amounts on deposit in the Distribution
Account. Subject to Section 8.05(b), the Trustee, or any director, officer,
employee or agent of it, shall be indemnified by the Trust Fund and held
harmless against any loss, liability or expense (not including expenses,
disbursements and advances
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incurred or made by the Trustee, including the reasonable compensation and the
expenses and disbursements of its agents and counsel, in the ordinary course
of its performance in accordance with the provisions of this Agreement)
incurred by the Trustee in connection with any claim or legal action or any
pending or threatened claim or legal action arising out of or in connection
with the acceptance or administration of its obligations and duties under this
Agreement, other than any loss, liability or expense (i) resulting from the
Servicer's actions or omissions in connection with this Agreement and the
Mortgage Loans, (ii) that constitutes a specific liability of the Trustee
pursuant to Section 10.01(c) or (iii) any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or negligence in the performance
of duties hereunder or by reason of reckless disregard of obligations and
duties hereunder or as a result of a breach of the its obligations under
Article X hereof. Any amounts payable to the Trustee, or any director,
officer, employee or agent of the Trustee, in respect of the indemnification
provided by this paragraph (a), or pursuant to any other right of
reimbursement from the Trust Fund that the Trustee, or any director, officer,
employee or agent of the Trustee, may have hereunder in its capacity as such,
may be withdrawn by the Trustee from the Distribution Account at any time.
Such indemnity shall survive the termination of this Agreement and the
resignation of the Trustee.
(b) As a limitation on the foregoing with respect to certain
expenses of the Trustee in its capacity as Trustee, the Trustee shall receive
from the Trust Fund amounts with respect to indemnification for reasonable
counsel fees and expenses (collectively, "Legal Fees") in connection with any
third-party litigation or other claims alleging violations of laws or
regulations relating to consumer lending and/or servicing of the Trust
(collectively, "Third Party Claims") in an amount not greater than $25,000 per
month, and $600,000 in the aggregate (with amounts in excess of $25,000 for
any month carried-forward to subsequent months, until the $600,000 aggregate
maximum is reached). The amounts, if any, described in the preceding sentence,
shall be paid on each Distribution Date in accordance with the priorities set
forth in Section 4.01(a)(3)(xiv) hereof to the extent of the Available
Distribution Amount. The Trustee shall not have any obligation to incur
additional expenses for which reimbursement is limited pursuant to this
paragraph in excess of the aggregate limit set forth above unless it has
received reasonable security or indemnity for such additional expenses. The
Certificateholders shall hold the Trustee harmless for any consequences to
such Certificateholders resulting from any failure of the Trustee to incur any
such additional expenses in excess of the aforementioned aggregate limit.
(c) The Servicer agrees to indemnify the Trustee from, and
hold it harmless against, any loss, liability or expense resulting from a
breach of the Servicer's obligations and duties under this Agreement. Such
indemnity shall survive the termination or discharge of this Agreement and the
resignation or removal of the Trustee. Any payment hereunder made by the
Servicer to the Trustee shall be from the Servicer's own funds, without
reimbursement from the Trust Fund therefor.
(d) The Depositor shall pay any annual rating agency fees of
S&P, Xxxxx'x and Fitch for ongoing surveillance from its own funds without
right of reimbursement.
(e) The Trustee shall deliver to the Depositor and each
Holder of a Non-Offered Certificate a report detailing all payments from the
Trust Fund made with respect to Legal Fees
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on account of Third-Party Claims. The report shall be delivered monthly,
promptly following any month in which such payments were made.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or
an association (other than the Depositor, the Seller, the Servicer or any
Affiliate of the foregoing) organized and doing business under the laws of any
state or the United States of America, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority. If such corporation or association publishes reports of conditions
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section the
combined capital and surplus of such corporation or association shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of conditions so published. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, the Trustee
shall resign immediately in the manner and with the effect specified in
Section 8.07.
SECTION 8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from
the trust hereby created by giving written notice thereof to the Depositor,
the Servicer and the Certificateholders. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor trustee by
written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee and to the successor trustee. A copy of such instrument
shall be delivered to the Certificateholders and the Servicer by the
Depositor. 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.
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 Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Depositor may remove the Trustee and appoint a successor by written
instrument, in duplicate, which instrument shall be delivered to the Trustee
so removed and to the successor. A copy of such instrument shall be delivered
to the Certificateholders and the Servicer by the Depositor.
The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee and appoint a successor 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 Depositor, 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 Servicer by
the Depositor.
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Any resignation or removal of the Trustee and appointment of
a successor pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor as provided in
Section 8.08.
SECTION 8.08. Successor Trustee.
Any successor appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor and to its predecessor an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor shall become effective and such successor,
without any further act, deed or conveyance, shall become fully vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with the like effect as if originally named as trustee herein. The predecessor
trustee shall deliver to its successor all Mortgage Files and related
documents and statements, as well as all moneys, held by it hereunder, and the
Depositor and the predecessor trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor shall be
eligible under the provisions of Section 8.06 and the appointment of such
successor shall not result in a downgrading of any Class of Certificates by
either Rating Agency, as evidenced by a letter from each Rating Agency.
Upon acceptance of appointment by a successor trustee as
provided in this Section, the Depositor shall mail notice of the succession to
all Holders of Certificates at their addresses as shown in the Certificate
Register. If the Depositor fails to mail such notice within 10 days after
acceptance of appointment by the successor, the successor shall cause such
notice to be mailed at the expense of the Depositor.
SECTION 8.09. Merger or Consolidation of Trustee.
Any corporation or association into which the Trustee may be
merged or converted or with which it may be consolidated or any corporation or
association resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation or association succeeding to
the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation or 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 Servicer and the Trustee, acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity, such
title to the Trust Fund, or any part thereof, and, subject to the other
provisions of this Section 8.10, such powers, duties, obligations, rights and
trusts as
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the Servicer and the Trustee may consider necessary or desirable. If
the Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request so to do, or in case a Servicer Event of
Default shall have occurred and be continuing, the Trustee alone shall have
the power to make such appointment. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 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. Any reasonable and necessary expense of the Trustee
related to the appointment of a co-trustee or a separate trustee for the
limited purpose of performing the Trustee's duties pursuant to this Section
8.10 shall be reimbursable from the Trust Fund.
In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10 all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or
imposed upon and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed by the
Trustee (whether as Trustee hereunder or as successor to the defaulting
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 trust conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
SECTION 8.11. [Reserved].
SECTION 8.12. Appointment of Office or Agency.
The Trustee designates its office at Xxxxx Xxxxxx xxx
Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, as its agency where the
Certificates may be surrendered for registration of transfer or exchange and
presented for final distribution. The Trustee designates its offices at 0000
Xxx Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000-0000, as the office at which
notices and demands to or upon the Trustee in respect of the Certificates may
be served and will notify the Certificateholders of any change in the location
of such office or agency.
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SECTION 8.13. Representations and Warranties.
The Trustee hereby represents and warrants to the Servicer
and the Depositor, as of the Closing Date, that:
(i) It is a national banking association duly
organized, validly existing and in good standing under the
laws of the United States.
(ii) The execution and delivery of this Agreement by
it, and the performance and compliance with the terms of
this Agreement by it, will not violate its charter or
articles of association 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) It has the full power and authority to enter
into and consummate all transactions contemplated by this
Agreement, has duly authorized the execution, delivery and
performance of this Agreement, and has duly executed and
delivered this Agreement.
This Agreement, assuming due authorization, execution and delivery by
the other parties, constitutes a valid, legal and binding obligation of it,
enforceable against it in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, receivership, 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.
SECTION 8.14. Yield Maintenance Agreement.
The Trustee shall not designate an Early Termination Date under the
Yield Maintenance Agreement without the consent of the Controlling Person.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of
All Mortgage Loans.
(a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Servicer and the
Trustee (other than the obligations of the Servicer to the Trustee pursuant to
Section 8.05 and of the Servicer to provide for and the Trustee to make
payments in respect of the REMIC I Regular Interests, the REMIC II Regular
Interests, the REMIC III Regular Interests, the REMIC IV Regular Interests, or
the Classes of Certificates as hereinafter set forth) shall terminate upon
payment to the Certificateholders and the deposit of all amounts held by or on
behalf of the Trustee and required hereunder to be so paid or deposited on the
Distribution Date coinciding with or following the earlier to occur of (i) the
purchase by the Servicer of all Mortgage Loans and each REO Property remaining
in the
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Trust Fund, (ii) the final payment or other liquidation (or any advance
with respect thereto) of the last Mortgage Loan or REO Property remaining in
the Trust Fund; 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 Xxxxxx X. Xxxxxxx, the late ambassador of the
United States to the Court of St. Xxxxx, living on the date hereof and (iii)
the Distribution Date in August 2032. The purchase by the Servicer of all of
the Mortgage Loans and each REO Property remaining in the Trust Fund shall be
at a price (the "Termination Price") equal to the sum of (1) 100% of the
Stated Principal Balance of each Mortgage Loan (other than in respect of REO
Property) plus one month's accrued interest thereon at the applicable Mortgage
Rate, (2) with respect to any REO Property, the lesser of (x) the appraised
value of any REO Property as determined by the higher of two appraisals
completed by two independent appraisers selected by the Depositor at the
expense of the Depositor and (y) the Stated Principal Balance of each Mortgage
Loan related to any REO Property, in each case plus accrued and unpaid
interest thereon at the applicable Mortgage Rate.
(b) The Servicer shall have the right to purchase all of the
Mortgage Loans and each REO Property remaining in the Trust Fund pursuant to
clause (i) of the preceding paragraph no later than the Determination Date in
the month immediately preceding the Distribution Date on which the
Certificates will be retired; provided, however, that the Servicer may elect
to purchase all of the Mortgage Loans and each REO Property remaining in the
Trust Fund pursuant to clause (i) above only if the Aggregate Collateral
Balance remaining in the Trust Fund at the time of such election is less than
10% of the Aggregate Collateral Balance as of the Initial Cut-off Date. By
acceptance of the Residual Certificates, the Holders of the Residual
Certificates agree, in connection with any termination hereunder, to assign
and transfer any amounts in excess of par, and to the extent received in
respect of such termination, to pay any such amounts to the Holders of the
Class X Certificates.
(c) Notice of the liquidation of the REMIC I Regular
Interests shall be given promptly by the Trustee by letter to
Certificateholders mailed (a) in the event such notice is given in connection
with the purchase of the Mortgage Loans and each REO Property by the Servicer,
not earlier than the 15th day and not later than the 25th day of the month
next preceding the month of the final distribution on the Certificates 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 the Trust Fund will terminate and final payment in respect of
the REMIC I Regular Interests, the REMIC II Regular Interests, the REMIC III
Regular Interests, the REMIC IV Regular Interests, and the Certificates will
be made upon presentation and surrender of the related Certificates at the
office of the Trustee therein designated, (ii) the amount of any such final
payment, (iii) that no interest shall accrue in respect of the REMIC I Regular
Interests, the REMIC II Regular Interests, the REMIC III Regular Interests,
the REMIC IV Regular Interests, or the Certificates from and after the
Interest Accrual Period relating to the final Distribution Date therefor and
(iv) 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. The Trustee shall give such
notice to the Certificate Registrar at the time such notice is given to
Certificateholders. In the event such notice is given in connection with the
purchase of all of the Mortgage Loans and each REO Property remaining in the
Trust Fund by the Servicer, the Servicer shall deliver to the Trustee for
deposit in the Distribution Account not later than the last Business Day of
the month
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next preceding the month of the final distribution on the Certificates an
amount in immediately available funds equal to the above-described purchase
price for the Mortgage Loans purchased by the Servicer. The Trustee shall
remit to the Servicer from such funds deposited in the Distribution Account
(i) any amounts which the Servicer would be permitted to withdraw and retain
from the Collection Account pursuant to Section 3.11 and (ii) any other
amounts otherwise payable by the Trustee to the Servicer from amounts on
deposit in the Distribution Account pursuant to the terms of this Agreement,
in each case prior to making any final distributions pursuant to Section
10.01(d) below. Upon certification to the Trustee by a Servicing Officer of
the making of such final deposit, the Trustee shall promptly release or cause
to be released to the Servicer the related Mortgage Files for the remaining
Mortgage Loans, and the Trustee shall execute all assignments, endorsements
and other instruments necessary to effectuate such transfer.
(d) Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Trustee shall
distribute to each Certificateholder so presenting and surrendering its
Certificates the amount otherwise distributable on such Distribution Date in
accordance with Section 4.01 in respect of the Certificates so presented and
surrendered. Any funds not distributed to any Holder or Holders of
Certificates being retired 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 by the Trustee 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 9.01 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 one year after the second notice all such Certificates shall not
have been surrendered for cancellation, the Trustee shall, directly or through
an agent, mail a final notice to remaining related 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
funds. If within one year after the final notice any such Certificates shall
not have been surrendered for cancellation, the Trustee shall pay to the
Depositor all such amounts, and all rights of non-tendering Certificateholders
in or to such amounts shall thereupon cease. No interest shall accrue or be
payable to any Certificateholder on any amount held in trust by the Trustee as
a result of such Certificateholder's failure to surrender its Certificate(s)
for final payment thereof in accordance with this Section 9.01.
Immediately following the deposit of funds in trust
hereunder in respect of the Certificates, the Trust Fund shall terminate.
SECTION 9.02. Additional Termination Requirements.
(a) In the event that the Servicer purchases all the
Mortgage Loans and each REO Property or the final payment on or other
liquidation of the last Mortgage Loan or REO Property remaining in the Trust
Fund pursuant to Section 9.01, the Trust Fund shall be terminated in
accordance with the following additional requirements:
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(i) The Trustee shall specify the first day in the
90-day liquidation period in a statement attached to REMIC
I's, REMIC II's, REMIC III's, REMIC IV's and REMIC V's final
Tax Return pursuant to Treasury regulation Section 1.860F-1
and shall satisfy all requirements of a qualified
liquidation under Section 860F of the Code and any
regulations thereunder, as evidenced by an Opinion of
Counsel obtained at the expense of the Servicer;
(ii) During such 90-day liquidation period, and at or
prior to the time of making of the final payment on the
Certificates, the Trustee shall sell all of the assets of
the Trust Fund to the Servicer for cash; and
(iii) At the time of the making of the final payment
on the Certificates, the Trustee shall distribute or credit,
or cause to be distributed or credited, to the Holders of
the Residual Certificates all cash on hand in the Trust Fund
(other than cash retained to meet claims), and the Trust
Fund shall terminate at that time.
(b) At the expense of the Servicer, the Trustee shall
prepare or cause to be prepared the documentation required in connection with
the adoption of a plan of liquidation of each REMIC executed hereunder
pursuant to this Section 9.02.
(c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day liquidation period
for each REMIC executed hereunder, which authorization shall be binding upon
all successor Certificateholders.
ARTICLE X
REMIC PROVISIONS
SECTION 10.01. REMIC Administration.
(a) The Trustee shall elect to treat each REMIC created
hereunder 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 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 election in respect of REMIC I, the
REMIC I Regular Interests shall be designated as the Regular Interests in
REMIC I and the Class R-I Certificates shall be designated as the Residual
Interests in the Trust Fund. The REMIC II Regular Interests shall be
designated as the Regular Interests in REMIC II and the Class R-II
Certificates shall be designated as the Residual Interests in REMIC II. The
REMIC III Regular Interests shall be designated as the Regular Interests in
REMIC III and the Class R-III Certificates shall be designated as the Residual
Interests in REMIC III. The REMIC IV Regular Interests shall be designated as
the Regular Interests in REMIC IV and the Class R-IV Certificates shall be
designated as the Residual Interests in REMIC IV. The Certificates (other than
the Residual Certificates) shall be designated as the Regular Interests in
REMIC V and the Class R-V Certificates shall be designated as the Residual
Interests in REMIC V. The Trustee shall not permit the creation of any
"interests" in any REMIC created hereunder (within the meaning of Section 860G
of the Code) other than the REMIC I Regular Interests, the REMIC II
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Regular Interests, REMIC III Regular Interest and REMIC IV Regular Interest
and the interests represented by the Certificates.
(b) The Closing Date is hereby designated as the "Startup
Day" of each REMIC created hereunder within the meaning of Section 860G(a)(9)
of the Code.
(c) The Trustee shall pay out of funds on deposit in the
Distribution Account, any and all expenses relating to any tax audit of the
Trust Fund (including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect to any REMIC created
hereunder that involve the Internal Revenue Service or state tax authorities)
unless such expenses, professional fees or any administrative or judicial
proceedings are incurred by reason of the Trustee's willful misfeasance, bad
faith or negligence. The Trustee, as agent for all of REMIC I's, REMIC II's,
REMIC III's, REMIC IV's and REMIC V's tax matters persons, shall (i) act on
behalf of the Trust Fund in relation to any tax matter or controversy
involving any REMIC created hereunder 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 and will be entitled to
reimbursement from the Trust Fund for any expenses incurred by the Trustee in
connection therewith unless such administrative or judicial proceeding
relating to an examination or audit by any governmental taxing authority is
incurred by reason of the Trustee's willful misfeasance, bad faith or
negligence. The holder of the largest Percentage Interest of each Class of
Residual Certificates shall be designated, in the manner provided under
Treasury regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1, as the tax matters person of the related REMIC created
hereunder. 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 the Trust Fund.
(d) The Trustee shall prepare, sign and file all of the Tax
Returns in respect of each REMIC created hereunder. The expenses of preparing
and filing such returns shall be borne by the Trustee without any right of
reimbursement therefor. The Servicer shall provide on a timely basis to the
Trustee or its designee such information with respect to the assets of the
Trust Fund as is in its possession and reasonably required by the Trustee to
enable it to perform its obligations under this Article.
(e) The Trustee shall perform on behalf of each REMIC
created hereunder all reporting and other tax compliance duties that are the
responsibility of such 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 Prepayment Assumption 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
each REMIC created hereunder. The Servicer shall provide on a timely basis to
the Trustee such information with respect to the assets of the Trust Fund,
including,
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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 each
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
Servicer shall assist the Trustee, to the extent reasonably requested by the
Trustee to do specific actions in order to assist in the maintenance of such
status). The Trustee shall not take any action, cause the Trust Fund to take
any action or fail to take (or fail to cause to be taken) any action that,
under the REMIC Provisions, if taken or not taken, as the case may be, could
(i) endanger the status of any REMIC created hereunder as a REMIC or (ii)
result in the imposition of a tax upon the Trust Fund (including but not
limited to the tax on prohibited transactions as defined in Section 860F(a)(2)
of the Code and the tax on contributions to a REMIC set forth in Section
860G(d) of the Code) (either such event, an "Adverse REMIC Event") unless the
Trustee 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 any REMIC created hereunder, endanger such status or result in
the imposition of such a tax, nor shall the 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; provided
that the Servicer may conclusively rely on such Opinion of Counsel and shall
incur no liability for its action or failure to act in accordance with such
Opinion of Counsel. In addition, prior to taking any action with respect to
any REMIC created hereunder or the respective assets of each, or causing any
REMIC created hereunder to take any action, which is not contemplated under
the terms of this Agreement, the 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 any REMIC created hereunder, and
the Servicer shall not take any such action or cause any REMIC created
hereunder to take such action as to which the Trustee has advised it in
writing that an Adverse REMIC Event could occur; provided that the Servicer
may conclusively rely on such writing and shall incur no liability for its
action or failure to act in accordance with such writing. 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 each 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 any REMIC created hereunder as defined in Section 860F(a)(2)
of the Code, on the "net income from foreclosure property" of such REMIC as
defined in Section 860G(c) of the Code, on any contributions to any such REMIC
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
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arises out of or results from a breach by the Trustee of any of its
obligations under this Article X, (ii) to the Servicer pursuant to Section
10.03 hereof, if such tax arises out of or results from a breach by the
Servicer of any of its obligations under Article III or this Article X, or
otherwise (iii) against amounts on deposit in the Distribution Account and
shall be paid by withdrawal therefrom.
(h) On or before April 15th of each calendar year,
commencing April 15, 2003, the Trustee shall deliver to the Servicer, each
Rating Agency and the Counterparty an Officer's Certificate from a Responsible
Officer of the Trustee stating, without regard to any actions taken by any
party other than the Trustee, the Trustee's compliance with this Article X.
(i) The Trustee shall, for federal income tax purposes,
maintain books and records with respect to each REMIC created hereunder on a
calendar year and on an accrual basis.
(j) Following the Startup Day, the Trustee shall not accept
any contributions of assets to any REMIC created hereunder other than in
connection with any Qualified Substitute Mortgage Loan delivered in accordance
with Section 2.03 unless it shall have received an Opinion of Counsel to the
effect that the inclusion of such assets in the Trust Fund will not cause the
related REMIC to fail to qualify as a REMIC at any time that any Certificates
are outstanding or subject such 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 Servicer shall enter into
any arrangement by which any REMIC created hereunder will receive a fee or
other compensation for services nor permit any such 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. As discussed above, for federal income tax purposes
any payments to the Counterparty under the Yield Maintenance Agreement will be
treated as a payment to the Strip Amount, as the case may be, and a payment
from the holder of said certificate to the Counterparty.
(l) The Trustee shall treat the Net WAC Fund as an outside
reserve fund within the meaning of Treasury Regulation 1.860G-2(h) that is
owned by the Class X Certificateholders and that is not an asset of the REMIC.
The Trustee shall treat the rights of the Class A1, Class M1, Class M2, and
Class B Certificateholders to receive payments from the Net WAC Fund as rights
in an interest rate cap contract written by the Class X Certificateholder in
favor of the other Certificateholders. Thus, each Certificate other than the
Class R, Class A-IO, Class B-IO, Strip Amount and Class P Certificates shall
be treated as representing ownership of not only REMIC V Regular Interests,
but also ownership of an interest in an interest rate cap contract. For
purposes of determining the issue price of the REMIC V Regular Interests, the
Trustee shall assume that the interest rate cap contract has a value of
$10,000.
(m) The Trustee shall apply for an Employee Identification
Number from the IRS via a Form SS-4 or any other applicable method for all tax
entities and will also file a Form 8811.
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SECTION 10.02. Prohibited Transactions and Activities.
None of the Depositor, the 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 the Trust Fund 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 any REMIC created hereunder (other than REO Property acquired
in respect of a defaulted Mortgage Loan), nor sell or dispose of any
investments in the Collection Account or the Distribution Account for gain,
nor accept any contributions to any REMIC created hereunder 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 any of any REMIC
Regular Interest created hereunder as a REMIC or (b) cause any REMIC Regular
Interest created hereunder to be subject to a tax on "prohibited transactions"
or "contributions" pursuant to the REMIC Provisions.
SECTION 10.03. Servicer and Trustee Indemnification.
(a) The Trustee agrees to indemnify, severally and not
jointly, the Trust Fund, the Depositor and the Servicer for any taxes and
costs including, without limitation, any reasonable attorneys fees imposed on
or incurred by the Trust Fund, the Depositor or the Servicer, as a result of a
breach of its respective covenants set forth in this Article X.
(b) The Servicer agrees to indemnify the Trust Fund, the
Depositor and the Trustee for any taxes and costs including, without
limitation, any reasonable attorneys' fees imposed on or incurred by the Trust
Fund, the Depositor or the Trustee, as a result of a breach of the Servicer's
covenants set forth in Article III or this Article X.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
This Agreement may be amended from time to time by the
Depositor, the Servicer and the Trustee without the consent of any of the
Certificateholders, (i) to cure any ambiguity or defect, (ii) to correct,
modify or supplement any provisions herein (including to give effect to the
expectations of Certificateholders), or (iii) to make any other provisions
with respect to matters or questions arising under this Agreement which shall
not be inconsistent with the provisions of this Agreement provided that such
action shall not, as evidenced by either (i) an Opinion of Counsel delivered
to the Trustee, adversely affect in any material respect the interests of any
Certificateholder or (ii) delivery to the Trustee of a letter from each Rating
Agency confirming the then-current ratings of the Offered Certificates. No
amendment shall be deemed to adversely
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affect in any material respect the interests of any Certificateholder who
shall have consented thereto, and no Opinion of Counsel shall be required to
address the effect of any such amendment on any such consenting
Certificateholder.
This Agreement may also be amended from time to time by the
Depositor, the Servicer and the Trustee with the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of 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% of the
Voting Rights allocated to such Class, or (iii) modify the consents required
by the immediately preceding clauses (i) and (ii) without the consent of the
Holders of all Certificates then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 11.01, Certificates registered in the name
of the Depositor or the Servicer or any Affiliate thereof shall be entitled to
Voting Rights with respect to matters affecting such Certificates.
Notwithstanding any contrary provision of this Agreement,
the Trustee shall be entitled to receive an Opinion of Counsel to the effect
that such amendment will not result in the imposition of any tax on any REMIC
created hereunder pursuant to the REMIC Provisions or cause any REMIC 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 to each Certificateholder.
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.
The cost of any Opinion of Counsel to be delivered pursuant
to this Section 11.01 shall be borne by the Person seeking the related
amendment, but in no event shall such Opinion of Counsel 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 Servicer at the expense of the Certificateholders, but only
upon direction of the
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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 counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
SECTION 11.03. Limitation on Rights of 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 any
of the Certificates, be construed so as to constitute the Certificateholders
from time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision
hereof.
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 (i)
such Holder previously shall have given to the Trustee a written notice of
default and of the continuance thereof, as hereinbefore provided, and (ii) the
Holders of Certificates entitled to at least 25% of the Voting Rights shall
have made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee 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 15 days after its receipt of such notice, request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding. It is understood and intended, and expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner
whatsoever 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.
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SECTION 11.04. Governing Law.
This Agreement shall be construed in accordance with the
laws of the State of New York and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 11.05. Notices.
All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when received if
personally delivered at or mailed by first class mail, postage prepaid, or by
express delivery service or facsimile transmission or delivered in any other
manner specified herein, to (a) in the case of the Depositor, 00 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, telecopy number (000) 000-0000, or such
other address or telecopy number as may hereafter be furnished to the Servicer
and the Trustee in writing by the Depositor, (b) in the case of the Seller, 00
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, telecopy number (000) 000-0000, or
such other address or telecopy number as may hereafter be furnished to the
Servicer and the Trustee in writing by the Seller, (c) in the case of the
Servicer, Fairbanks Capital Corp., 0000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx,
Xxxx 00000, Attention: Xxxxxxx X. Xxxxxx (telecopy number (000) 000-0000), or
such other address or telecopy number as may hereafter be furnished to the
Trustee and the Depositor in writing by Fairbanks Capital Corp., (d) in the
case of the Trustee, 0000 Xxx Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000-0000,
Attention: ABSC 2002-HE2 (telecopy number (000) 000-0000) and a copy to Xxxxx
Xxxxxx xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: ABSC
2002-HE2, or such other address or telecopy number as may hereafter be
furnished to the Servicer and the Depositor in writing by the Trustee, (e) in
the case of New Century Mortgage Corporation, 00000 Xxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxx 00000, Attention: President (telecopy number: (000) 000-0000), or
such other address or telecopy number as may hereafter be furnished to the
Trustee, the Servicer and the Depositor in writing by New Century Mortgage
Corporation, (f) in the case of WMC Mortgage Corp., 0000 Xxxxxx Xxxxxx,
Xxxxxxxx Xxxxx, XX 00000, Attention: Xxxxx Xxxxxxxx (telecopy number: (818)
596-4962) and Xxxxxx Xxxxxxxxx (telecopy number: (000) 000-0000) or such other
address or telecopy number as may hereafter be furnished to the Trustee, the
Servicer and the Depositor in writing by WMC Mortgage Corp., and (g) in the
case of Long Beach Mortgage Company, 0000 Xxxx xxx Xxxxxxx Xxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxxxx 00000, Attention: General Counsel (telecopy number: (714)
543-6847) or such other address or telecopy number as may hereafter be
furnished to the Trustee, the Servicer and the Depositor in writing by Long
Beach Mortgage Company. Any notice required or permitted to be given 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 when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder also shall be mailed to the appropriate party in the
manner set forth above.
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,
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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. Notice to Rating Agencies and the
Counterparty.
The Trustee shall use its best efforts promptly to provide
notice to the Rating Agencies and the Counterparty with respect to each of the
following of which it has actual knowledge:
(1) Any amendment to this Agreement;
(2) The occurrence of a Servicer Event of Default that has
not been cured or waived;
(3) The resignation or termination of the Servicer or the
Trustee;
(4) The repurchase or substitution of Mortgage Loans pursuant
to or as contemplated by Section 2.03;
(5) The final payment to the Holders of any Class of
Certificates;
(6) Any change in the location of the Collection Account or
the Distribution Account;
(7) The Trustee, were it to succeed as the Servicer, is
unable to make advances regarding Delinquent Mortgage
Loans; and
(8) The filing of any claim under the Servicer's blanket
bond and errors and omissions insurance policy required
by Section 3.14 or the cancellation or material
modification of coverage under any such instrument.
In addition, the Trustee shall make available to each Rating
Agency and the Counterparty copies of each report to Certificateholders
described in Section 4.02 and the Servicer, as required pursuant to Section
3.20 and Section 3.21, shall make available to each Rating Agency copies of
the following:
(1) Each annual statement as to compliance described in
Section 3.20; and
(2) Each annual independent public accountants' servicing
report described in Section 3.21.
Any such notice pursuant to this Section 11.07 shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by facsimile transmission
or express delivery service to Xxxxx'x Investors Service, Inc., 00 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Fitch, Inc., Xxx Xxxxx Xxxxxx Xxxxx, Xxx
Xxxx, XX 00000, Attention: Asset Backed Securities Corporation Home Equity
Loan Trust 2002-HE2, and to Standard & Poor's Ratings Services, a division of
the XxXxxx-Xxxx Companies, Inc. at 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX
00000, Attention: Structured
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Finance Surveillance Group, Credit Suisse First Boston International, One
Xxxxx Xxxxxx, Xxxxxx X00 0XX, Xxxxxxx, Attention: Head of Credit Risk
Management or such other addresses as the Rating Agencies or the Counterparty
may designate in writing to the parties hereto.
SECTION 11.08. Article and Section References.
All article and section references used in this Agreement,
unless otherwise provided, are to articles and sections in this Agreement.
SECTION 11.09. Third Party Rights.
The Counterparty shall be a third-party beneficiary of this
Agreement.
SECTION 11.10. Grant of Security Interest.
It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Depositor to the Trustee be, and be
construed as, a sale of the Mortgage Loans by the Depositor and not a pledge
of the Mortgage Loans by the Depositor to secure a debt or other obligation of
the Depositor. However, in the event that, notwithstanding the aforementioned
intent of the parties, the Mortgage Loans are held to be property of the
Depositor, then, (a) it is the express intent of the parties that such
conveyance be deemed a pledge of the Mortgage Loans by the Depositor to the
Trustee to secure a debt or other obligation of the Depositor and (b)(1) this
Agreement shall also be deemed to be a security agreement within the meaning
of Articles 8 and 9 of the Uniform Commercial Code as in effect from time to
time in the State of New York; (2) the conveyance provided for in Section 2.01
hereof shall be deemed to be a grant by the Depositor to the Trustee of a
security interest in all of the Depositor's right, title and interest in and
to the Mortgage Loans and all amounts payable to the holders of the Mortgage
Loans in accordance with the terms thereof and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, instruments, securities
or other property, including without limitation all amounts, other than
investment earnings, from time to time held or invested in the Collection
Account and the Distribution Account, whether in the form of cash,
instruments, securities or other property; (3) the obligations secured by such
security agreement shall be deemed to be all of the Depositor's obligations
under this Agreement, including the obligation to provide to the
Certificateholders the benefits of this Agreement relating to the Mortgage
Loans and the Trust Fund; and (4) 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. Accordingly, the Depositor hereby grants to the
Trustee a security interest in the Mortgage Loans and all other property
described in clause (2) of the preceding sentence, for the purpose of securing
to the Trustee the performance by the Depositor of the obligations described
in clause (3) of the preceding sentence. Notwithstanding the foregoing, the
parties hereto intend the conveyance pursuant to Section 2.01 to be a true,
absolute and unconditional sale of the Mortgage Loans and assets constituting
the Trust Fund by the Depositor to the Trustee.
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SECTION 11.11. Protection of Assets.
Except for transactions and activities entered into in
connection with the securitization that is the subject of this Agreement, the
Trust is not authorized and has no power to:
(1) borrow money or issue debt;
(2) merge with another entity, reorganize, liquidate or sell
assets; or
(3) engage in any business or activities.
Each party to this Agreement agrees that it will not file an
involuntary bankruptcy petition or initiate any other form of insolvency
proceeding against the Trust Fund until after the Certificates have been paid.
141
IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have
caused their names to be signed hereto by their respective officers thereunto
duly authorized, in each case as of the day and year first above written.
ASSET BACKED SECURITIES CORPORATION,
as Depositor
By: /s/ Xxxx Xxxxxxx
-------------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
DLJ MORTGAGE CAPITAL, INC.,
as Seller
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
FAIRBANKS CAPITAL CORP.,
as Servicer
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
XXXXX FARGO BANK MINNESOTA, N.A.,
as Trustee
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
000
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
On the 28th day of May 2002, before me, a notary public in and for
said State, personally appeared Xxxx Xxxxxxx, known to me to be a
Vice President of Asset Backed Securities Corporation, one of the
corporations that executed the within instrument, and also known to
me to be the person who executed it on behalf of said corporation,
and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above
written.
/s/ Xxxxxxx Xxxxxxxx
-------------------------
Notary Public
[Notarial Seal]
000
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
On the 28th day of May 2002, before me, a notary public in and for
said State, personally appeared Xxxxxx X. Xxxxxx, known to me to be a
Vice President of DLJ Mortgage Capital, Inc., one of the corporations
that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above
written.
/s/ Xxxxxxx Xxxxxxxx
----------------------
Notary Public
[Notarial Seal]
144
STATE OF UTAH )
) ss.:
COUNTY OF SALT LAKE )
On the 23rd day of May 2002, before me, a notary public in and for
said State, personally appeared Xxxxxxx X. Xxxxx, known to me to be
an Executive Vice President of Fairbanks Capital Corp., one of the
corporations that executed the within instrument, and also known to
me to be the person who executed it on behalf of said corporation,
and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above
written.
/s/ Xxxxxxx X. Xxxxxxx
--------------------------
Notary Public
[Notarial Seal]
145
STATE OF )
) ss.:
COUNTY OF )
On the 28th day of May 2002, before me, a notary public in and for
said State, personally appeared Xxxxx X. Xxxxxx, known to me to be a
Vice President of Xxxxx Fargo Bank Minnesota, N.A., one of the
entities 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 entity executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above
written.
/s/ Xxxx X. Xxxx
------------------------
Notary Public
[Notarial Seal]
146
[A1][A2]
EXHIBIT A-1
-----------
FORM OF CLASS [A1][A2] CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
Series 2002-HE2, Class A_ Aggregate Certificate Principal Balance of the
Class A_ Certificates as of the Issue Date:
Pass-Through Rate: Variable $_____________
Date of Pooling and Servicing Agreement: Denomination: $____________
May 1, 2002.
First Distribution Date: Servicer:
June 17, 2002 Fairbanks Capital Corp.
No. ____ Trustee: Xxxxx Fargo Bank Minnesota, N.A.
Issue Date: May 30, 2002
CUSIP: ____________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
ANY TIME MAY
A-1-1
BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family and
multifamily fixed-rate and adjustable-rate first lien and second lien mortgage
loans (the "Mortgage Loans") formed and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES.
This certifies that ____________ is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the Class [A-1][A-2] Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced
by all the Class [A-1][A-2] Certificates created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Asset
Backed Securities Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer, and the
Trustee, a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class [A-1][A-2]
Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of
A-1-2
this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
The Pass-Through Rate applicable to the calculation of interest payable
with respect to this Certificate on any Distribution Date shall equal a rate
per annum equal to the lesser of (i) the One-Month LIBOR plus _____%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less
than 10% of the aggregate principal balance of the Mortgage Loans as of the
related cut-off date, or One-Month LIBOR plus _____% per annum, in the case of
any Distribution Date thereafter, and (ii) the Available Funds Cap for such
Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. As provided in the Agreement, withdrawals
from the Collection Account and the Distribution Account may be made from time
to time for purposes other than distributions to Certificateholders, such
purposes including, without limitation, reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, and the
Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the offices or agencies appointed by the Trustee as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the
A-1-3
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations evidencing the same aggregate Percentage Interest, as requested
by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee, and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee, or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer,
the Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby 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 pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-1-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May __, 2002
XXXXX FARGO BANK MINNESOTA, N.A.,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class [A-1][A-2] Certificates referred to in the
within-mentioned Agreement.
XXXXX FARGO BANK MINNESOTA, N.A.,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-1-5
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
___________________ ___________________________________
Dated:
______________________________________
Signature by or on behalf of assignor
______________________________________
Signature Guaranteed
A-1-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________
for the account of ___________________________, account number ______________,
or, if mailed by check, to _______________________________________________.
Applicable statements should be mailed to __________________________________
This information is provided by _______________, the assignee named above, or
____________________________, as its agent.
A-1-7
[M1 & M2]
EXHIBIT A-2
-----------
FORM OF CLASS [M1] [M2] CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A1 AND CLASS A2
CERTIFICATES [AND THE CLASS M1 CERTIFICATES] TO THE EXTENT DESCRIBED
IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
Series 2002-HE2, Class [M1] [M2] Aggregate Certificate Principal Balance of the
Class [M1] [M2] Certificates as of the Issue
Pass-Through Rate: Variable Date: $____________
Date of Pooling and Servicing Agreement: May 1, 2002. Denomination: $___________
First Distribution Date: Servicer:
June 17, 2002 Fairbanks Capital Corp.
No. ____ Trustee: Xxxxx Fargo Bank Minnesota, N.A.
A-2-1
Issue Date: May [__], 2002
CUSIP: ______________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING
A-2-2
CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family and
multifamily fixed-rate and adjustable-rate first lien and second lien mortgage
loans (the "Mortgage Loans") formed and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES.
This certifies that ____________ is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the [M1] [M2] Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the [M1] [M2] Certificates created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Asset Backed
Securities Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Seller, the Servicer,
and the Trustee, a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class [M1] [M2]
Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice
A-2-3
by the Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Trustee for that purpose as provided in the Agreement.
The Pass-Through Rate applicable to the calculation of interest payable
with respect to this Certificate on any Distribution Date shall equal a rate
per annum equal to the lesser of (i) the One-Month LIBOR plus _____%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less
than 10% of the aggregate principal balance of the Mortgage Loans as of the
related cut-off date, or One-Month LIBOR plus _____%, in the case of any
Distribution Date thereafter, and (ii) the Available Funds Cap for such
Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. As provided in the Agreement, withdrawals
from the Collection Account and the Distribution Account may be made from time
to time for purposes other than distributions to Certificateholders, such
purposes including, without limitation, reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to at least 66% of
the Voting Rights. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the offices or agencies appointed by the Trustee as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
A-2-4
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer,
the Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby 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 pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-2-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May __, 2002
XXXXX FARGO BANK MINNESOTA, N.A.,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class [M1] [M2] Certificates referred to in the
within-mentioned Agreement.
XXXXX FARGO BANK MINNESOTA, N.A.,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-2-6
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
__________________________.
Dated:
______________________________________
Signature by or on behalf of assignor
______________________________________
Signature Guaranteed
A-2-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________
for the account of ___________________________, account number ______________,
or, if mailed by check, to _______________________________________________.
Applicable statements should be mailed to __________________________________
This information is provided by _______________, the assignee named above, or
____________________________, as its agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS B CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE
CLASS M1 CERTIFICATES AND THE CLASS M2 CERTIFICATES TO THE EXTENT
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
Series 2002-HE2, Class B Aggregate Certificate Principal Balance of the
Class B Certificates as of the Issue Date:
Pass-Through Rate: Variable $__________
Date of Pooling and Servicing Agreement: May 1, 2002. Denomination: $___________
First Distribution Date: Servicer:
June 17, 2002 Fairbanks Capital Corp.
No. __ Trustee: Xxxxx Fargo Bank Minnesota, N.A.
Issue Date: May [__], 2002
A-3-1
CUSIP: _____________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family and
multifamily fixed-rate and adjustable-rate first lien and second lien mortgage
loans (the "Mortgage Loans") formed and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY
OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that __________ is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the Class B Certificates as of the
Issue Date) in that certain beneficial ownership interest evidenced by all the
Class B Certificates created pursuant to a Pooling and Servicing Agreement,
dated as specified above (the "Agreement"), among Asset Backed Securities
Corporation (hereinafter called the "Depositor," which term includes any
successor entity under the Agreement), the Seller, the Servicer, and the
Trustee, a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds
A-3-2
to the account of the Person entitled thereto if such Person shall have so
notified the Trustee in writing at least five Business Days prior to the
Record Date immediately prior to such Distribution Date, or otherwise by check
mailed by first class mail to the address of the Person entitled thereto, as
such name and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose as provided in the Agreement.
The Pass-Through Rate applicable to the calculation of interest payable
with respect to this Certificate on any Distribution Date shall equal a rate
per annum equal to the lesser of (i) the One-Month LIBOR plus ____%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less
than 10% of the aggregate principal balance of the Mortgage Loans as of the
related cut-off date, or One-Month LIBOR plus _____%, in the case of any
Distribution Date thereafter, and (ii) the Available Funds Cap for such
Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. As provided in the Agreement, withdrawals
from the Collection Account and the Distribution Account may be made from time
to time for purposes other than distributions to Certificateholders, such
purposes including, without limitation, reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to at least 66% of
the Voting Rights. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the offices or agencies appointed by the Trustee as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly
A-3-3
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer,
the Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby 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 pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May __, 2002
A-3-4
XXXXX FARGO BANK MINNESOTA, N.A.,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class B Certificates referred to in the
within-mentioned Agreement.
XXXXX FARGO BANK MINNESOTA, N.A.,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-3-5
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ___________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
___________________.
Dated:
______________________________________
Signature by or on behalf of assignor
______________________________________
Signature Guaranteed
A-3-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________
for the account of ___________________________, account number ______________,
or, if mailed by check, to _______________________________________________.
Applicable statements should be mailed to __________________________________
This information is provided by _______________, the assignee named above, or
____________________________, as its agent.
X-0-0
XXXXXXX X-0
-----------
FORM OF CLASS X CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE
CLASS M CERTIFICATES AND THE CLASS B CERTIFICATES TO THE EXTENT
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE
CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
A-4-1
Series 2002-HE2, Class X Aggregate Certificate Principal Balance of the
Class X Certificates as of the Issue Date:
Pass-Through Rate:
Denomination: $______________
Date of Pooling and Servicing Agreement: May 1, 2002. Servicer:
First Distribution Date: Fairbanks Capital Corp.
June 17, 2002 Trustee: Xxxxx Fargo Bank Minnesota, N.A.
No. ___ Issue Date: May [__], 2002
CUSIP: _______________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family and
multifamily fixed-rate and adjustable-rate first lien and second lien mortgage
loans (the "Mortgage Loans") formed and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY
OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class X Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class X Certificates created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Asset Backed
Securities Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Seller, the Servicer,
and the Trustee, a summary of certain of the pertinent
A-4-2
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class X Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. As provided in the Agreement, withdrawals
from the Collection Account and the Distribution Account may be made from time
to time for purposes other than distributions to Certificateholders, such
purposes including, without limitation, reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to at least 66% of
the Voting Rights. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
A-4-3
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the offices or agencies appointed by the Trustee as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
require receipt of (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the Holder of
the Certificate desiring to effect the transfer, and from such Holder's
prospective transferee, substantially in the forms attached to the Agreement
as Exhibit F-1, and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trustee or the Servicer in their respective
capacities as such), together with copies of the written certification(s) of
the Holder of the Certificate desiring to effect the transfer and/or such
Holder's prospective transferee upon which such Opinion of Counsel is based.
Neither the Depositor, the Certificate Registrar or the Trustee is obligated
to register or qualify the Class of Certificates specified on the face hereof
under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor, the Certificate Registrar and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall
be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Certificate Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
A-4-4
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer,
the Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby 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 pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement.
A-4-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May __, 2002
XXXXX FARGO BANK MINNESOTA, N.A.,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class X Certificates referred to in the
within-mentioned Agreement.
XXXXX FARGO BANK MINNESOTA, N.A.,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-4-6
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
___________________ ___________________________________
Dated:
______________________________________
Signature by or on behalf of assignor
______________________________________
Signature Guaranteed
A-4-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________
for the account of ___________________________, account number ______________,
or, if mailed by check, to _______________________________________________.
Applicable statements should be mailed to __________________________________
This information is provided by _______________, the assignee named above, or
____________________________, as its agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS P CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE
CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
Series 2002-HE2, Class P Aggregate Certificate Principal Balance of the
Class P Certificates as of the Issue Date:
Date of Pooling and Servicing Agreement: $100.00
May 1, 2002.
Denomination: $_________
First Distribution Date:
Servicer:
June 17, 2002 Fairbanks Capital Corp.
No. ___ Trustee: Xxxxx Fargo Bank Minnesota, N.A.
Issue Date: May [__], 2002
A-5-1
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family and
multifamily fixed-rate and adjustable-rate first lien and second lien mortgage
loans (the "Mortgage Loans") formed and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY
OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class P Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class P Certificates created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Asset Backed
Securities Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Seller, the Servicer,
and the Trustee, a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class P Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing
at least five Business Days prior to the Record Date immediately prior to such
A-5-2
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including, without limitation, reimbursement
of advances made, or certain expenses incurred, with respect to the Mortgage
Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, and the
Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
A-5-3
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
require receipt of (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the Holder of
the Certificate desiring to effect the transfer, and from such Holder's
prospective transferee, substantially in the forms attached to the Agreement
as Exhibit F-1, and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trustee or the Servicer in their respective
capacities as such), together with copies of the written certification(s) of
the Holder of the Certificate desiring to effect the transfer and/or such
Holder's prospective transferee upon which such Opinion of Counsel is based.
None of the Depositor, the Certificate Registrar or the Trustee is obligated
to register or qualify the Class of Certificates specified on the face hereof
under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor, the Certificate Registrar and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall
be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor,
the Servicer, the Trustee, the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby 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 pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined
A-5-4
as provided in the Agreement from the Trust Fund of all the Mortgage Loans and
all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to
purchase from the Trust Fund all the Mortgage Loans and all property acquired
in respect of any Mortgage Loan at a price determined as provided in the
Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Stated Principal Balance of the Mortgage Loans and any REO properties owned by
the Trust at the time of purchase being less than 10% of the sum of the
aggregate Stated Principal Balance of the Mortgage Loans at the Initial
Cut-off Date plus the amount on deposit in the Pre-Funding Account on the
Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement .
A-5-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May __, 2002
XXXXX FARGO BANK MINNESOTA, N.A.,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class P Certificates referred to in the
within-mentioned Agreement.
XXXXX FARGO BANK MINNESOTA, N.A.,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-5-6
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
______________________________________________________________.
Dated:
______________________________________
Signature by or on behalf of assignor
______________________________________
Signature Guaranteed
A-5-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________
for the account of ___________________________, account number ______________,
or, if mailed by check, to _______________________________________________.
Applicable statements should be mailed to __________________________________
This information is provided by _______________, the assignee named above, or
____________________________, as its agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS A-IO CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE.
A-6-1
Series 2002-HE2, Class A-IO Servicer: Fairbanks Capital Corp.
Pass-Through Rate: _____% Trustee: Xxxxx Fargo Bank Minnesota, N.A.
Date of Pooling and Servicing Agreement: May 1, 2002. Issue Date: May [__], 2002
First Distribution Date:
June 17, 2002
No. __
Aggregate Notional Amount of the Class A-IO Certificates
as of the Issue Date:
$___________
DISTRIBUTIONS IN REDUCTION OF THE NOTIONAL AMOUNT OF THIS CERTIFICATE
MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE AGGREGATE
NOTIONAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family and
multifamily fixed-rate and adjustable-rate first lien and second lien mortgage
loans (the "Mortgage Loans") formed and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY
OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Notional Amount of the Class A-IO Certificates as of the
Issue Date) in that certain beneficial ownership interest evidenced by all the
Class A-IO Certificates created pursuant to a Pooling and Servicing Agreement,
dated as specified above (the "Agreement"), among Asset Backed Securities
Corporation (hereinafter called the "Depositor," which term includes any
successor entity under
A-6-2
the Agreement), the Seller, the Servicer, and the Trustee, a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-IO Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Notional Amount of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including, without limitation, reimbursement
of advances made, or certain expenses incurred, with respect to the Mortgage
Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, and the
Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
A-6-3
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
require receipt of (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the Holder of
the Certificate desiring to effect the transfer, and from such Holder's
prospective transferee, substantially in the forms attached to the Agreement
as Exhibit F-1, and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trustee or the Servicer in their respective
capacities as such), together with copies of the written certification(s) of
the Holder of the Certificate desiring to effect the transfer and/or such
Holder's prospective transferee upon which such Opinion of Counsel is based.
Neither the Depositor, the Certificate Registrar or the Trustee is obligated
to register or qualify the Class of Certificates specified on the face hereof
under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor, the Certificate Registrar and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall
be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
A-6-4
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor,
the Servicer, the Trustee ,the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby 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 pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement.
A-6-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: May __, 2002
XXXXX FARGO BANK MINNESOTA, N.A.,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-IO Certificates referred to in the
within-mentioned Agreement.
XXXXX FARGO BANK MINNESOTA, N.A.,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-6-6
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
___________________ ___________________________________
Dated:
______________________________________
Signature by or on behalf of assignor
______________________________________
Signature Guaranteed
A-6-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________
for the account of ___________________________, account number ______________,
or, if mailed by check, to _______________________________________________.
Applicable statements should be mailed to __________________________________
This information is provided by _______________, the assignee named above, or
____________________________, as its agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE
CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE
TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED STATES OR ANY
POSSESSION THEREOF, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY
FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
INSTRUMENTALITY OF ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER
THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS
EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH
ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION
A-7-1
511 OF THE CODE, (3) ANY ORGANIZATION DESCRIBED IN SECTION
1381(a)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING
CLAUSES (1), (2) OR (3) SHALL HEREINAFTER BE REFERRED TO AS A
"DISQUALIFIED ORGANIZATION") OR (4) AN AGENT OF A DISQUALIFIED
ORGANIZATION AND (B) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE
ASSESSMENT OR COLLECTION OF TAX, AND (II) SUCH TRANSFEREE SATISFIES
CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF
THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER DISPOSITION OF
THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A
DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF
NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE
DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER,
INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE HEREOF
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH
AND THE PROVISIONS OF SECTION 5.02(d) OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED
ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF
THIS CERTIFICATE.
Series 2002-HE2, Class R Aggregate Percentage Interest of the Class R
Certificates as of the Issue Date: 100.00%
Date of Pooling and Servicing Agreement:
May 1, 2002. Percentage Interest of this Class R Certificate: 100.00%
First Distribution Date: June 17, 2002
Servicer: Fairbanks Capital Corp.
No. __
Trustee: Xxxxx Fargo Bank Minnesota, N.A.
Issue Date: May [__], 2002
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family and
multifamily fixed-rate and adjustable-rate first lien and second lien mortgage
loans (the "Mortgage Loans") formed and sold by
A-7-2
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY
OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ______________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class R Certificates created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Asset Backed
Securities Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Seller, the Servicer,
and the Trustee, a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class R Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
A-7-3
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including, without limitation, reimbursement
of advances made, or certain expenses incurred, with respect to the Mortgage
Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, and the
Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if
such transfer is purportedly being made in reliance upon Rule 144A under the
1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii)
in all other cases, an Opinion of Counsel satisfactory to it that such
transfer may be made without such registration or qualification (which Opinion
of Counsel shall not be an expense of the Trust Fund or of the Depositor, the
Trustee or the Servicer in their respective capacities as such), together with
copies of the written certification(s) of the Holder of the Certificate
desiring to effect the transfer and/or such Holder's prospective transferee
upon which such Opinion of Counsel is based. Neither the Depositor nor the
Trustee is obligated to
A-7-4
register or qualify the Class of Certificates specified on the face hereof
under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor and the Servicer against any liability that may result
if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall
be made except in accordance with Section 5.02(c) of the Agreement.
Prior to registration of any transfer, sale or other disposition of
this Certificate, the proposed transferee shall provide to the Trustee (i) an
affidavit to the effect that such transferee is any Person other than a
Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a pro rata
share of the net income of the Trust Fund and that such income may be an
"excess inclusion," as defined in the Code, that, with certain exceptions,
cannot be offset by other losses or benefits from any tax exemption, and (C)
it expects to have the financial means to satisfy all of its tax obligations
including those relating to holding the Class R Certificates. Notwithstanding
the registration in the Certificate Register of any transfer, sale or other
disposition of this Certificate to a Disqualified Organization or an agent
(including a broker, nominee or middleman) of a Disqualified Organization,
such registration shall be deemed to be of no legal force or effect whatsoever
and such Person shall not be deemed to be a Certificateholder for any purpose,
including, but not limited to, the receipt of distributions in respect of this
Certificate.
The Holder of this Certificate, by its acceptance hereof, shall be
deemed to have consented to the provisions of Section 5.02 of the Agreement
and to any amendment of the Agreement deemed necessary by counsel of the
Depositor to ensure that the transfer of this Certificate to any Person other
than a Permitted Transferee or any other Person will not cause the Trust Fund
to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor,
the Servicer, the Trustee, the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the
A-7-5
Trustee and required to be paid to them pursuant to the Agreement following
the earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund, and
(ii) the purchase by the party designated in the Agreement at a price
determined as provided in the Agreement from the Trust Fund of all the
Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all the Mortgage Loans and all
property acquired in respect of any Mortgage Loan at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans and any REO
properties owned by the Trust at the time of purchase being less than 10% of
the sum of the aggregate Stated Principal Balance of the Mortgage Loans at the
Initial Cut-off Date plus the amount on deposit in the Pre-Funding Account on
the Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-7-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: May __, 2002
XXXXX FARGO BANK MINNESOTA, N.A.,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R Certificates referred to in the
within-mentioned Agreement.
XXXXX FARGO BANK MINNESOTA, N.A.,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-7-7
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
___________________ ___________________________________
Dated:
______________________________________
Signature by or on behalf of assignor
______________________________________
Signature Guaranteed
A-7-8
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________
for the account of ___________________________, account number ______________,
or, if mailed by check, to _______________________________________________.
Applicable statements should be mailed to __________________________________
This information is provided by _______________, the assignee named above, or
____________________________, as its agent.
X-0-0
XXXXXXX X-0
-----------
FORM OF CLASS B-IO CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE. THIS CERTIFICATE IS
SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS A-IO CERTIFICATES,
THE CLASS M1 CERTIFICATES AND THE CLASS M2 CERTIFICATES TO THE EXTENT
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE
CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE.
A-8-1
Series 2002-HE2, Class B-IO Servicer: Fairbanks Capital Corp.
Pass-Through Rate: _____%
Trustee: Xxxxx Fargo Bank Minnesota, N.A.
Date of Pooling and Servicing Agreement: May 1, 2002.
Issue Date: May [__], 2002
First Distribution Date:
June 17, 2002
No. __
Aggregate Notional Amount of the Class B-IO Certificates
as of the Issue Date:
$___________
DISTRIBUTIONS IN REDUCTION OF THE NOTIONAL AMOUNT OF THIS CERTIFICATE
MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE AGGREGATE
NOTIONAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family and
multifamily fixed-rate and adjustable-rate first lien and second lien mortgage
loans (the "Mortgage Loans") formed and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY
OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Notional Amount of the Class B-IO Certificates as of the
Issue Date) in that certain beneficial ownership interest evidenced by all the
Class B-IO Certificates created pursuant to a Pooling and Servicing Agreement,
dated as specified above (the "Agreement"), among Asset Backed Securities
Corporation (hereinafter called the "Depositor," which term includes any
successor entity under
A-8-2
the Agreement), the Seller, the Servicer, and the Trustee, a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B-IO Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Notional Amount of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including, without limitation, reimbursement
of advances made, or certain expenses incurred, with respect to the Mortgage
Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, and the
Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
A-8-3
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
require receipt of (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the Holder of
the Certificate desiring to effect the transfer, and from such Holder's
prospective transferee, substantially in the forms attached to the Agreement
as Exhibit F-1, and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trustee or the Servicer in their respective
capacities as such), together with copies of the written certification(s) of
the Holder of the Certificate desiring to effect the transfer and/or such
Holder's prospective transferee upon which such Opinion of Counsel is based.
Neither the Depositor, the Certificate Registrar or the Trustee is obligated
to register or qualify the Class of Certificates specified on the face hereof
under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor, the Certificate Registrar and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall
be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
A-8-4
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor,
the Servicer, the Trustee ,the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby 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 pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement.
A-8-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: May __, 2002
XXXXX FARGO BANK MINNESOTA, N.A.,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class B-IO Certificates referred to in the
within-mentioned Agreement.
XXXXX FARGO BANK MINNESOTA, N.A.,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-8-6
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
___________________________________.
Dated:
______________________________________
Signature by or on behalf of assignor
______________________________________
Signature Guaranteed
A-8-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________________________
for the account of ___________________________, account number ______________,
or, if mailed by check, to _______________________________________________.
Applicable statements should be mailed to __________________________________
This information is provided by _______________, the assignee named above, or
____________________________, as its agent.
A-8-8
EXHIBIT B
---------
Representations and Warranties of the Seller with respect to the DLJMC Mortgage
Loans
DLJMC, in its capacity as Seller, hereby makes the following
representations and warranties to the Depositor and the Trustee, as of the
Closing Date, or if so specified herein, as of the Cut-off Date or such other
date as may be specified, with respect to the DLJMC Mortgage Loans identified
on Schedule 1, Part D hereto (references in this Exhibit B to "Mortgage,"
"Mortgage Loan," "Mortgaged Property," "Mortgage File," "Mortgagor" and
"Mortgage Note" are solely with respect to the DLJMC Mortgage Loans):
(i) The Seller or its affiliate is the sole owner of record and
holder of the Mortgage Loan and the indebtedness evidenced by the Mortgage
Note. Immediately prior to the transfer and assignment to the Depositor on the
Closing Date or the Subsequent Transfer Date, as applicable, the Mortgage
Loan, including the Mortgage Note and the Mortgage, were not subject to an
assignment or pledge, and the Seller had good and marketable title to and was
the sole owner thereof and had full right to transfer and sell the Mortgage
Loan to the Depositor free and clear of any encumbrance, equity, lien, pledge,
charge, claim or security interest and has the full right and authority
subject to no interest or participation of, or agreement with, any other
party, to sell and assign the Mortgage Loan and following the sale of the
Mortgage Loan, the Depositor will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest.
(ii) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity or disclosure
laws applicable to the Mortgage Loan have been complied with in all material
respects.
(iii) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments which have been recorded to the extent any such recordation is
required by law, or, necessary to protect the interest of the Depositor. No
instrument of waiver, alteration or modification has been executed, and no
Mortgagor has been released, in whole or in part, from the terms thereof
except in connection with an assumption agreement and which assumption
agreement is part of the Mortgage File and the terms of which are reflected in
Schedule 1, Part D; the substance of any such waiver, alteration or
modification has been approved by the issuer of any related Primary Insurance
Policy and title insurance policy, to the extent required by the related
policies.
(iv) The Mortgage Loan complies with all the terms, conditions and
requirements of the originator's underwriting standards in effect at the time
of origination of such Mortgage Loan.
(v) The information set forth in Schedule 1, Part D to the Agreement
is complete, true and correct in all material respects as of the Cut-off Date.
(vi) The related Mortgage is a valid, subsisting, enforceable and
perfected first lien on the Mortgaged Property and, all buildings on the
Mortgaged Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems affixed to such
B-1
buildings, and all additions, alterations and replacements made at anytime
with respect to the foregoing securing the Mortgage Note's original principal
balance. The Mortgage and the Mortgage Note do not contain any evidence of any
security interest or other interest or right thereto. Such lien is free and
clear of all adverse claims, liens and encumbrances having priority over the
first lien, as applicable, of the Mortgage subject only to (1) the lien of
non-delinquent current real property taxes and assessments not yet due and
payable, (2) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording which are
acceptable to mortgage lending institutions generally and either (A) which are
referred to or otherwise considered in the appraisal made for the originator
of the Mortgage Loan, or (B) which do not adversely affect the appraised value
of the Mortgaged Property as set forth in such appraisal, and (3) other
matters to which like properties are commonly subject which do not materially
interfere with the benefits of the security intended to be provided by the
Mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property. Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting, enforceable and perfected first
lien and first priority security interest on the property described therein,
and the Seller has the full right to sell and assign the same to the
Depositor.
(vii) There are no mechanics' or similar liens or claims which have
been filed for work, labor or material (and no rights are outstanding that
under law could give rise to such liens) affecting the related Mortgaged
Property which are or may be liens prior to or equal to the lien of the
related Mortgage.
(viii) All taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, or escrow funds have been
established in an amount sufficient to pay for every such escrowed item which
remains unpaid and which has been assessed but is not yet due and payable.
(ix) The Mortgage Note and the Mortgage are not subject to any right
of rescission, set-off, counterclaim or defense, including, without
limitation, the defense of usury, nor will the operation of any of the terms
of the Mortgage Note or the Mortgage, or the exercise of any right thereunder,
render the Mortgage Note or Mortgage unenforceable, in whole or in part, or
subject to any right of rescission, set-off, counterclaim or defense,
including the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto.
(x) The Mortgaged Property is not subject to any material damage by
waste, fire, earthquake, windstorm, flood or other casualty. At origination of
the Mortgage Loan there was, and there currently is, no proceeding pending for
the total or partial condemnation of the Mortgaged Property.
(xi) All improvements subject to the Mortgage which were considered
in determining the appraised value of the Mortgaged Property lie wholly within
the boundaries and building restriction lines of the Mortgaged Property (and
wholly within the project with respect to a condominium unit) and no
improvements on adjoining properties encroach upon the Mortgaged Property
except those which are insured against by a title insurance policy and all
B-2
improvements on the property comply with all applicable zoning and subdivision
laws and ordinances.
(xii) The Seller has delivered or caused to be delivered to the
Trustee or the Custodian on behalf of the Trustee the original Mortgage
bearing evidence that such instruments have been recorded in the appropriate
jurisdiction where the Mortgaged Property is located as determined by the
Seller (or, in lieu of the original of the Mortgage or the assignment thereof,
a duplicate or conformed copy of the Mortgage or the instrument of assignment,
if any, together with a certificate of receipt from the Seller or the
settlement agent who handled the closing of the Mortgage Loan, certifying that
such copy or copies represent true and correct copy(ies) of the originals) and
that such original(s) have been or are currently submitted to be recorded in
the appropriate governmental recording office of the jurisdiction where the
Mortgaged Property is located) or a certification or receipt of the recording
authority evidencing the same.
(xiii) The Mortgage File contains each of the documents specified in
Section 2.01(a) of the Agreement.
(xiv) As of the Closing Date, each Mortgage Loan shall be serviced
in all material respects in accordance with the terms of the Agreement.
(xv) All buildings or other customarily insured improvements upon
the Mortgaged Property are insured by an insurer acceptable under the Xxxxxx
Xxx guidelines, against loss by fire, hazards of extended coverage and such
other hazards as are provided for in the Xxxxxx Mae guidelines or by Xxxxxxx
Mac, as well as all additional requirements set forth in this Agreement. All
such standard hazard policies are in full force and effect and on the date of
origination contained a standard mortgagee clause naming the Seller and its
successors in interest and assigns as loss payee and such clause is still in
effect and all premiums due thereon have been paid. If at the time of
origination, the Mortgage Loan was required to have flood insurance coverage
in accordance with the Flood Disaster Protection Act of 1973, as amended, such
Mortgage Loan is covered by a flood insurance policy meeting the requirements
of the current guidelines of the Federal Insurance Administration which policy
conforms to Xxxxxx Mae and Xxxxxxx Mac requirements, as well as all additional
requirements set forth in this Agreement. Such policy was issued by an insurer
acceptable under Xxxxxx Mae or Xxxxxxx Mac guidelines. The Mortgage obligates
the Mortgagor thereunder to maintain all such insurance at the Mortgagor's
cost and expense, and upon the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to maintain such insurance at the Mortgagor's cost and
expense and to seek reimbursement therefor from the Mortgagor.
(xvi) With respect to a Mortgage Loan, the Mortgage creates a first
lien or a first priority ownership interest in an estate in fee simple in real
property securing the related Mortgage Note.
(xvii) As of the Cut-off Date, no Mortgage Loan is (a) a
non-performing loan (i.e., a mortgage loan that is more than 90 days
delinquent); (b) a re-performing loan (i.e. a mortgage loan
that was more than 90 days delinquent within the twelve-month period preceding
the Cut-off Date but is contractually current); or (c) a sub-performing loan
(i.e. a mortgage loan
B-3
that is at least 30 days delinquent but subject to a payment plan or agreement
pursuant to which the Mortgagor is contractually current).
(xix) The Mortgage Note and the related Mortgage are original and
genuine and each is the legal, valid and binding obligation of the maker
thereof, enforceable in all respects in accordance with its terms subject to
bankruptcy, insolvency, moratorium, reorganization and other laws of general
application affecting the rights of creditors and by general equitable
principles.
(xx) To the knowledge of the Seller, (i) no mortgage loan in the
mortgage pool or in either of the loan groups contemplated under the terms of
this Agreement was subject to the Home Ownership and Equity Protection Act of
1994 or any comparable state law, (ii) no proceeds from any mortgage loan in
the mortgage pool or in either of the loan groups contemplated under the terms
of this Agreement were used to finance single-premium credit insurance
policies, and (iii) no mortgage loan in the mortgage pool or in either of the
loan groups contemplated under the terms of this Agreement will impose a
prepayment premium for a term in excess of five years.
B-4
EXHIBIT C-1
-----------
FORM OF TRUST RECEIPT AND INITIAL CERTIFICATION
_______________, 2002
Asset Backed Securities Corporation
Eleven Madison Avenue, Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fairbanks Capital Corporation
0000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Xxxxx Fargo Bank Minnesota, N.A.
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Corporate Trust Services - CSFB ABSC Series 2002-HE2
Re: Custodial Agreement, dated as of May 1, 2002 ("Custodial
Agreement"), between Xxxxx Fargo Bank Minnesota, N.A. (the
"Trustee") and [U.S. Bank National Association][JPMorgan Chase
Bank] (the "Custodian").
--------------------------------------------------------------
Ladies and Gentlemen:
In accordance with the provisions of the above-referenced Custodial
Agreement, the undersigned, as the Custodian, hereby certifies that as to each
Mortgage Loan described in the Mortgage Loan Schedule attached as Exhibit 5 to
the Custodial Agreement and a copy of which is attached hereto, it has
reviewed the Custodial File and has determined that: (i) all documents listed
in Section 2 hereof, to the extent applicable, are in its possession (subject
to any exceptions listed herein), (ii) such documents have been reviewed by it
and appear regular on their face and relate to such Mortgage Loan, (iii) each
Mortgage Note has been endorsed by the related Seller, without recourse, (iv)
each Custodial File includes an Assignment of Mortgage in blank from the
related Seller, and (v) based on its examination, the foregoing documents on
their face satisfy the requirements set forth in Section 2 of the Custodial
Agreement.
The Custodian will accept and act on instructions with respect to the
Mortgage Loans subject hereto upon surrender of this Trust Receipt and
Certification at its office at [180 East Fifth Street, Mezzanine Level, St.
Xxxx, Minnesota 55101][1111 Xxxxxx Street, 00xx Xxxxx, Xxxxxxx, Xxxxx 00000],
Attention: [Document Custody Services].
C-1-1
All terms used herein shall have the meanings ascribed to them in the
above-referenced Custodial Agreement.
[U.S. BANK NATIONAL ASSOCIATION]
[JPMORGAN CHASE BANK],
as Custodian
By:____________________________________
Name:
Title:
C-1-2
EXHIBIT C-2
-----------
TRUST RECEIPT AND FINAL CERTIFICATION
_______________, 2002
Asset Backed Securities Corporation
Eleven Madison Avenue, Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fairbanks Capital Corporation
0000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Xxxxx Fargo Bank Minnesota, N.A.
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Corporate Trust Services - CSFB ABSC Series 2002-HE2
Re: Custodial Agreement, dated as of May 1, 2002 ("Custodial
Agreement"), between Xxxxx Fargo Bank Minnesota, N.A. (the
"Trustee") and [U.S. Bank National Association][JPMorgan Chase
Bank] (the "Custodian").
--------------------------------------------------------------
Ladies and Gentlemen:
In accordance with the provisions of Section 6 of the above-referenced
Custodial Agreement, the undersigned, as the Custodian, hereby certifies that
as to each Mortgage Loan listed on the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full) it has reviewed the Custodial Files and has
determined that (i) all documents required to be delivered to it pursuant to
Sections 2(i)-(vi) of the Custodial Agreement are in its possession; (ii) such
documents have been reviewed by it (including the information set forth in
items (i),(ii), (iii) and (vi) of the Mortgage Loan Schedule) and appear
regular on their face and relate to such Mortgage Loan; (iii) all Assignments
of Mortgage or intervening Assignments of Mortgage, as applicable, have been
submitted for recording in the jurisdiction in which recording is necessary;
and (iv) each Mortgage Note has been endorsed as provided in Section 2(ii) of
the Custodial Agreement and each Mortgage has been assigned in accordance with
Section 2(iv) of the Custodial Agreement.
The Custodian hereby confirms that it is holding each such Custodial File
as agent and bailee of, and custodian for the exclusive use and benefit, and
subject to the sole direction, of Trustee pursuant to the terms and conditions
of the Custodial Agreement.
This Trust Receipt and Final Certification is not divisible or
negotiable.
The Custodian will accept and act on instructions with respect to the
Mortgage Loans subject hereto upon surrender of this Trust Receipt and Final
Certification at its office at [180
X-0-0
Xxxx Xxxxx Xxxxxx, Xxxxxxxxx Xxxxx, Xx. Xxxx, Minnesota 55101][1111 Xxxxxx
Street, 00xx Xxxxx, Xxxxxxx, Xxxxx 00000], Attention: [Document Custody
Services].
All terms used herein shall have the meanings ascribed to them in the
above-referenced Custodial Agreement.
[U.S. BANK NATIONAL ASSOCIATION]
[JPMORGAN CHASE BANK],
as Custodian
By:________________________________
Name:
Title:
C-2-2
EXHIBIT D
---------
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
[ON FILE AT THE OFFICES OF SIDLEY XXXXXX XXXXX & XXXX LLP]
D-1
EXHIBIT E-1
-----------
FORM OF REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
[Date]
To: U.S. Bank National Association
000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx Xxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention_____________________________:
Re: The Custodial Agreement, dated as of May 1, 2002, between Xxxxx Fargo
Bank Minnesota, N.A., as trustee (the "Trustee"), and U.S. Bank
National Association, as custodian (the "Custodian"), executed
pursuant to the Pooling and Servicing Agreement, dated as of May 1,
2002 (the "Pooling and Servicing Agreement"), among Asset Backed
Securities Corporation, as depositor (the "Depositor"), DLJ Mortgage
Capital, Inc. ("DLJMC"), as seller, the Trustee and Fairbanks Capital
Corp., as servicer (the "Servicer").
In connection with the Custodial Files held by U.S. Bank National
Association, as the Custodian on behalf of the Trustee, we request the
release, and acknowledge receipt, of the (Custodial File/[specify documents])
for the Mortgage Loan described below, for the reason indicated.
Mortgagor's Name, Address & Zip Code:
------------------------------------
Mortgage Loan Number:
--------------------
Method of Shipment:
------------------
Reason for Requesting Documents (check one)
-------------------------------
______1. Mortgage Loan Paid in Full. (Trustee hereby certifies that all
amounts received in connection therewith have been received.)
______2. Mortgage Loan Liquidated. (Trustee hereby certifies that all
proceeds of foreclosure, insurance, liquidation or other disposition
have been finally received and credited.)
______3. (a) Mortgage Loan in foreclosure or another method of liquidation or
modification.
(b) Mortgage Loan subject to documentation corrections for errors
and ambiguities. (Trustee or its designee hereby certifies that
the
D-2
documentation released pursuant to this Request for Release
of Documents has errors or ambiguities that require correction
and that such documentation shall be corrected in a prompt
manner and returned to the Custodian in accordance with the
Pooling and Servicing Agreement.)
______4. Mortgage Loan repurchased pursuant to Section 2.02 of the Pooling
and Servicing Agreement.(Trustee hereby certifies that the
Repurchase Price has been paid).
______5. Other servicing release (explain)
___________________________________________________________________
___________________________________________________________________
If box 1 or 2 above is checked, and if all or part of the Custodial
File was previously released to us, please release to us our previous receipt
on file with you, as well as any additional documents in your possession
relating to the above specified Mortgage Loan.
If box 3, 4, or 5 above is checked, upon our return to you, as
Custodian, of all of the released documents with respect to the Custodial File
for the above specified Mortgage Loan, please acknowledge your receipt by
signing in the space indicated below, and returning this form.
Capitalized words and not otherwise defined herein have the meanings
assigned to them in the Pooling and Servicing Agreement, dated as of May 1,
2002.
__________________________________,
Trustee or its designee)
By:____________________________
Name:__________________________
Title:_________________________
Date:_________________________
D-3
Receipt of documents returned to Custodian:
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Custodian
By:____________________________________
Name:_______________________________
Title:______________________________
E-1-1
EXHIBIT E-2
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
[SEE EXHIBIT E-1]
E-2-1
EXHIBIT F-1
FORM OF TRANSFEROR REPRESENTATION LETTER
[Date]
Xxxxx Fargo Bank Minnesota, N.A.
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Trust Services - ABSC 2002-HE2
Re: Asset Backed Securities Corporation,
Asset Backed Pass-Through Certificates, Series 2002-HE2,
Class ___, representing a ___% Class ___ Percentage Interest
------------------------------------------------------------
Ladies and Gentlemen:
In connection with the transfer by ________________ (the "Transferor") to
________________ (the "Transferee") of the captioned Asset Backed Pass-Through
Certificates (the "Certificates"), the Transferor hereby certifies as follows:
Neither the Transferor nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition
or other transfer of any Certificate, any interest in any Certificate or any
other similar security from any person in any manner, (c) has otherwise
approached or negotiated with respect to any Certificate, any interest in any
Certificate or any other similar security with any person in any manner, (d)
has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of
the 1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will
not sell or otherwise transfer any of the Certificates, except in compliance
with the provisions of that certain Pooling and Servicing Agreement, dated as
of May 1, 2002, among Asset Backed Securities Corporation as Depositor, DLJ
Mortgage Capital, Inc. as Seller, Fairbanks Capital Corp. as Servicer and
Xxxxx Fargo Bank Minnesota, N.A., as Trustee (the "Pooling and Servicing
Agreement"), pursuant to which the Certificates were issued.
Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Pooling and Servicing Agreement.
F-1-1
Very truly yours,
[Transferor]
By:_________________________________
Name:
Title:
F-1-2
FORM OF TRANSFEREE REPRESENTATION LETTER
[Date]
Xxxxx Fargo Bank Minnesota, N.A.
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Trust Services - ABSC 2002-HE2
Re: Asset Backed Securities Corporation,
Asset Backed Pass-Through Certificates, Series 2002-HE2,
Class ___, representing a ___% Class ___ Percentage Interest
------------------------------------------------------------
Ladies and Gentlemen:
In connection with the purchase from ______________________ (the
"Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), _______________ (the "Transferee") hereby certifies as
follows:
1. The Transferee is a "qualified institutional buyer" as that term
is defined in Rule 144A ("Rule 144A") under the Securities Act of 1933
(the "1933 Act") and has completed either of the forms of certification
to that effect attached hereto as Annex 1 or Annex 2. The Transferee is
aware that the sale to it is being made in reliance on Rule 144A. The
Transferee is acquiring the Certificates for its own account or for the
account of a qualified institutional buyer, and understands that such
Certificate may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases
for its own account or for the account of a qualified institutional buyer
to whom notice is given that the resale, pledge or transfer is being made
in reliance on Rule 144A, or (ii) pursuant to another exemption from
registration under the 1933 Act.
2. The Transferee has been furnished with all information regarding
(a) the Certificates and distributions thereon, (b) the nature,
performance and servicing of the Mortgage Loans, (c) the Pooling and
Servicing Agreement referred to below, and (d) any credit enhancement
mechanism associated with the Certificates, that it has requested.
F-1-3
All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement,
dated as of May 1, 2002, among Asset Backed Securities Corporation, as
Depositor, DLJ Mortgage Capital, Inc., as Seller, Fairbanks Capital Corp., as
Servicer and Xxxxx Fargo Bank Minnesota, N.A., as Trustee, pursuant to which
the Certificates were issued.
[TRANSFEREE]
By:________________________________
Name:
Title:
F-1-4
ANNEX 1 TO EXHIBIT F-1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor] (the
"Transferor") and Xxxxx Fargo Bank Minnesota, N.A., as Trustee, with respect
to the Asset Backed Pass-Through Certificates (the "Certificates") described
in the Transferee Certificate to which this certification relates and to which
this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the entity
purchasing the Certificates (the "Transferee").
2. In connection with purchases by the Transferee, the Transferee is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Transferee owned and/or
invested on a discretionary basis $______________________ in securities
(except for the excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A) and (ii) the Transferee satisfies the criteria in
the category marked below.
___ Corporation, etc. The Transferee is a corporation (other
than a bank, savings and loan association or similar
institution), Massachusetts or similar business trust,
partnership, or any organization described in Section
501(c)(3) of the Internal Revenue Code of 1986.
___ Bank. The Transferee (a) is a national bank or banking
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the
State or territorial banking commission or similar official
or is a foreign bank or equivalent institution, and (b) has
an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, a copy of which
is attached hereto.
___ Savings and Loan. The Transferee (a) is a savings and loan
association, building and loan association, cooperative
bank, homestead association or similar institution, which is
supervised and examined by a State or Federal authority
having supervision over any such institutions or is a
foreign savings and loan association or equivalent
institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Broker-dealer. The Transferee is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
F-1-5
___ Insurance Company. The Transferee is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State,
territory or the District of Columbia.
___ State or Local Plan. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Transferee is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income Security
Act of 1974, as amended.
___ Investment Advisor. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.
3. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Transferee, (ii) securities that are
part of an unsold allotment to or subscription by the Transferee, if the
Transferee is a dealer, (iii) securities issued or guaranteed by the U.S. or
any instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency, interest rate
and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Transferee, the Transferee
used the cost of such securities to the Transferee and did not include any of
the securities referred to in the preceding paragraph. Further, in determining
such aggregate amount, the Transferee may have included securities owned by
subsidiaries of the Transferee, but only if such subsidiaries are consolidated
with the Transferee in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Transferee's direction. However, such
securities were not included if the Transferee is a majority-owned,
consolidated subsidiary of another enterprise and the Transferee is not itself
a reporting company under the Securities Exchange Act of 1934.
5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because
one or more sales to the Transferee may be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the Certificates
Yes No only for the Transferee's own account?
6. If the answer to the foregoing question is "no", the Transferee agrees
that, in connection with any purchase of securities sold to the Transferee for
the account of a third party (including any separate account) in reliance on
Rule 144A, the Transferee will only purchase for the account of a third party
that at the time is a "qualified institutional buyer" within the meaning of
Rule 144A. In addition, the Transferee agrees that the Transferee will not
purchase securities for a third party unless the Transferee has obtained a
current representation letter from such third party or taken other appropriate
steps contemplated by Rule 144A to conclude that such third
C-1-8
party independently meets the definition of "qualified institutional buyer"
set forth in Rule 144A.
7. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Transferee's purchase of the
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.
Dated:
______________________________________
Print Name of Transferee
By:___________________________________
Name:
Title:
F-1-7
ANNEX 2 TO EXHIBIT F-1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor] (the
"Transferor") and Xxxxx Fargo Bank Minnesota, N.A., as Trustee, with respect
to the Asset Backed Pass-Through Certificates (the "Certificates") described
in the Transferee Certificate to which this certification relates and to which
this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the entity purchasing the Certificates
(the "Transferee") or, if the Transferee is a "qualified institutional buyer"
as that term is defined in Rule 144A under the Securities Act of 1933 ("Rule
144A") because the Transferee is part of a Family of Investment Companies (as
defined below), is such an officer of the investment adviser (the "Adviser").
2. In connection with purchases by the Transferee, the Transferee is a
"qualified institutional buyer" as defined in Rule 144A because (i) the
Transferee is an investment company registered under the Investment Company
Act of 1940, and (ii) as marked below, the Transferee alone, or the
Transferee's Family of Investment Companies, owned at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the
end of the Transferee's most recent fiscal year. For purposes of determining
the amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used.
____ The Transferee owned $___________________ in securities
(other than the excluded securities referred to below) as of
the end of the Transferee's most recent fiscal year (such
amount being calculated in accordance with Rule 144A).
____ The Transferee is part of a Family of Investment Companies
which owned in the aggregate $______________ in securities
(other than the excluded securities referred to below) as of
the end of the Transferee's most recent fiscal year (such
amount being calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit
notes and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.
F-1-8
5. The Transferee is familiar with Rule 144A and understands that the
parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to
the Transferee will be in reliance on Rule 144A. In addition, the Transferee
will only purchase for the Transferee's own account.
F-1-9
The undersigned will notify the parties to which this certification is
made of any changes in the information and conclusions herein. Until such
notice, the Transferee's purchase of the Certificates will constitute a
reaffirmation of this certification by the undersigned as of the date of such
purchase.
Dated:
_________________________________________
Print Name of Transferee
By:______________________________________
Name:
Title:
IF AN ADVISER:
_________________________________________
Print Name of Transferee
F-1-10
FORM OF TRANSFEREE REPRESENTATION LETTER
The undersigned hereby certifies on behalf of the purchaser named
below (the "Purchaser") as follows:
1. I am an executive officer of the Purchaser.
2. The Purchaser is a "qualified institutional buyer", as defined in
Rule 144A, ("Rule 144A") under the Securities Act of 1933, as amended.
3. As of the date specified below (which is not earlier than the
last day of the Purchaser's most recent fiscal year), the amount of
"securities", computed for purposes of Rule 144A, owned and invested on a
discretionary basis by the Purchaser was in excess of $100,000,000.
Name of Purchaser
By: (Signature)
Name of Signatory
Title
Date of this certificate
Date of information provided in paragraph 3
F-1-11
EXHIBIT F-2
-----------
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
____________________________________, being duly sworn, deposes,
represents and warrants as follows:
1. I am a ______________________ of ____________________________
(the "Owner") a corporation duly organized and existing under the laws of
______________, the record owner of Asset Backed Securities Corporation, Home
Equity Loan Trust 2002-HE2 Asset Backed Pass-Through Certificates, Series
2002-HE2, Class R (the "Class R Certificates"), on behalf of whom I make this
affidavit and agreement. Capitalized terms used but not defined herein have
the respective meanings assigned thereto in the Pooling and Servicing
Agreement pursuant to which the Class R Certificates were issued.
2. The Owner (i) is and will be a "Permitted Transferee" as of
____________________, 20___ and (ii) is acquiring the Class R Certificates for
its own account or for the account of another Owner from which it has received
an affidavit in substantially the same form as this affidavit. A "Permitted
Transferee" is any person other than a "disqualified organization" or a
possession of the United States. For this purpose, a "disqualified
organization" means the United States, any state or political subdivision
thereof, any agency or instrumentality of any of the foregoing (other than an
instrumentality all of the activities of which are subject to tax and, except
for the Federal Home Loan Mortgage Corporation, a majority of whose board of
directors is not selected by any such governmental entity) or any foreign
government, international organization or any agency or instrumentality of
such foreign government or organization, any rural electric or telephone
cooperative, or any organization (other than certain farmers' cooperatives)
that is generally exempt from federal income tax unless such organization is
subject to the tax on unrelated business taxable income.
3. The Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified organizations under the
Internal Revenue Code of 1986 that applies to all transfers of the Class R
Certificates after March 31, 1988; (ii) that such tax would be on the
transferor or, if such transfer is through an agent (which person includes a
broker, nominee or middleman) for a non-Permitted Transferee, on the agent;
(iii) that the person otherwise liable for the tax shall be relieved of
liability for the tax if the transferee furnishes to such person an affidavit
that the transferee is a Permitted Transferee and, at the time of transfer,
such person does not have actual knowledge that the affidavit is false; and
(iv) that each of the Class R Certificates may be a "noneconomic residual
interest" within the meaning of proposed Treasury regulations promulgated
under the Code and that the transferor of a "noneconomic residual interest"
will remain liable for any taxes due with respect to the income on such
residual interest, unless no significant purpose of the transfer is to impede
the assessment or collection of tax.
F-2-1
In accordance with Revenue Procedure 2001-12, I.R.B. 2001-2
(December 8, 2000), the Transferee represents and warrants that one of the
following applies:
(i) the consideration paid to the Transferee for accepting the Class
R Certificates is greater than the present value of the anticipated
net federal income taxes and tax benefits ("Tax Liability Present
Value") associated with owning such Certificates, with such present
value computed using a discount rate equal to the "applicable
federal rate" prescribed by Section 1274 of the Internal Revenue
Code as of the date hereof (with all applicable computations done in
accordance with Rev. Proc. 2001-12) or, to the extent it is not, if
the Transferee has asserted that it regularly borrows, in the
ordinary course of its trade or business, substantial funds from
unrelated third parties at a lower interest rate than such
applicable federal rate and the consideration paid to the Transferee
is greater than the Tax Liability Present Value using such lower
interest rate as the discount rate, the transactions with the
unrelated third party lenders, the interest rate or rates, the date
or dates of such transactions, and the maturity dates or, in the
case of adjustable rate debt instruments, the relevant adjustment
dates or periods, with respect to such borrowings, are accurately
stated in Exhibit A to this letter; or
(ii) the Transferee (A) is an "eligible corporation" as defined in
Section 860L(a)(2) of the Internal Revenue Code, as to which the
income of Class R Certificates will only be subject to taxation in
the United States, (B) has, and has had in each of its two preceding
fiscal years, gross assets for financial reporting purposes
(excluding any obligation of a person related to the transferee
within the meaning of Section 860L of the Internal Revenue Code) in
excess of $100 million and net assets of $10 million, and (C) hereby
agrees only to transfer the Certificate to another corporation
meeting the criteria set forth in this letter.
4. The Owner is aware of the tax imposed on a "pass-through entity"
holding the Class R Certificates if, at any time during the taxable year of
the pass-through entity, a non-Permitted Transferee is the record holder of an
interest in such entity. (For this purpose, a "pass-through entity" includes a
regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)
5. The Owner is aware that the Trustee will not register the
transfer of any Class R Certificate unless the transferee, or the transferee's
agent, delivers to the Trustee, among other things, an affidavit in
substantially the same form as this affidavit. The Owner expressly agrees that
it will not consummate any such transfer if it knows or believes that any of
the representations contained in such affidavit and agreement are false.
6. The Owner consents to any additional restrictions or arrangements
that shall be deemed necessary upon advice of counsel to constitute a
reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is a Permitted Transferee.
7. The Owner's taxpayer identification number is ___________________.
F-2-2
8. The Owner has reviewed the restrictions set forth on the face of
the Class R Certificates and the provisions of Section 5.02(d) of the Pooling
and Servicing Agreement under which the Class R Certificates were issued (in
particular, clauses (iii)(A) and (iii)(B) of Section 5.02(d) which authorize
the Trustee to deliver payments to a person other than the Owner and negotiate
a mandatory sale by the Trustee in the event that the Owner holds such
Certificate in violation of Section 5.02(d)); and that the Owner expressly
agrees to be bound by and to comply with such restrictions and provisions.
9. The Owner is not acquiring and will not transfer the Class R
Certificates in order to impede the assessment or collection of any tax.
10. The Owner anticipates that it will, so long as it holds the
Class R Certificates, have sufficient assets to pay any taxes owed by the
holder of such Class R Certificates, and hereby represents to and for the
benefit of the person from whom it acquired the Class R Certificates that the
Owner intends to pay taxes associated with holding such Class R Certificates
as they become due, fully understanding that it may incur tax liabilities in
excess of any cash flows generated by the Class R Certificates.
11. The Owner has no present knowledge that it may become insolvent
or subject to a bankruptcy proceeding for so long as it holds the Class R
Certificates.
12. The Owner has no present knowledge or expectation that it will
be unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding.
13. The Owner is not acquiring the Class R Certificates with the
intent to transfer the Class R Certificates to any person or entity that will
not have sufficient assets to pay any taxes owed by the holder of such Class R
Certificates, or that may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class R Certificates remain outstanding.
14. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, obtain from its transferee the representations
required by Section 5.02(d) of the Pooling and Servicing Agreement under which
the Class R Certificate were issued and will not consummate any such transfer
if it knows, or knows facts that should lead it to believe, that any such
representations are false.
15. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, deliver to the Trustee an affidavit, which
represents and warrants that it is not transferring the Class R Certificates
to impede the assessment or collection of any tax and that it has no actual
knowledge that the proposed transferee: (i) has insufficient assets to pay any
taxes owed by such transferee as holder of the Class R Certificates; (ii) may
become insolvent or subject to a bankruptcy proceeding for so long as the
Class R Certificates remains outstanding; and (iii) is not a "Permitted
Transferee".
16. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate
or trust whose income from sources without the United States may be included
in gross income for United States federal income tax purposes regardless of
its connection with the conduct of a trade or business within the United
States.
F-2-3
17. The Owner of the Class R Certificate, hereby agrees that in the
event that the Trust Fund created by the Pooling and Servicing Agreement is
terminated pursuant to Section 9.01 thereof, the undersigned shall assign and
transfer to the Holders of the Class X Certificates any amounts in excess of
par received in connection with such termination. Accordingly, in the event of
such termination, the Trustee is hereby authorized to withhold any such
amounts in excess of par and to pay such amounts directly to the Holders of
the Class X Certificates. This agreement shall bind and be enforceable against
any successor, transferee or assigned of the undersigned in the Class R
Certificate. In connection with any transfer of the Class R Certificate, the
Owner shall obtain an agreement substantially similar to this clause from any
subsequent owner.
18. The Owner is not an employee benefit plan within the meaning of
section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or other retirement arrangement, including individual
retirement accounts and annuities, Xxxxx plans and bank collective investment
funds and insurance company general or separate accounts in which such plans,
accounts or arrangements are invested, that is subject to Section 406 of ERISA
or Section 4975 of the Internal Revenue Code of 1986 (the "Code") (any of the
foregoing, a "Plan"), and is not acquiring the Class R Certificates with "plan
assets" of a Plan within the meaning of the Department of Labor ("DOL")
regulation, 29 C.F.R. ss. 2510.3-101.
F-2-4
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors,
by its [Vice] President, attested by its [Assistant] Secretary, this ____ day
of __________, 20__.
[OWNER]
By:____________________________________
Name:
Title: [Vice] President
ATTEST:
By:_________________________________
Name:
Title: [Assistant] Secretary
Personally appeared before me the above-named , known or proved to me to
be the same person who executed the foregoing instrument and to be a [Vice]
President of the Owner, and acknowledged to me that [he/she] executed the same
as [his/her] free act and deed and the free act and deed of the Owner.
Subscribed and sworn before me this ____ day of __________, 20__.
_____________________________________
Notary Public
County of _____________________
State of __________________
My Commission expires:
F-2-5
FORM OF TRANSFEROR AFFIDAVIT
STATE OF NEW YORK )
: ss. :
COUNTY OF NEW YORK )
______________________________________, being duly sworn, deposes,
represents and warrants as follows:
1. I am a ____________________ of _____________________________ (the
"Owner"), a corporation duly organized and existing under the laws of
______________, on behalf of whom I make this affidavit.
2. The Owner is not transferring the Class R Certificates (the
"Residual Certificates") to impede the assessment or collection of any tax.
3. The Owner has no actual knowledge that the Person that is the
proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as
holder of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.
4. The Owner understands that the Purchaser has delivered to the
Trustee a transfer affidavit and agreement in the form attached to the Pooling
and Servicing Agreement as Exhibit F-2. The Owner does not know or believe
that any representation contained therein is false.
5. At the time of transfer, the Owner has conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Owner has determined that the Purchaser has historically
paid its debts as they became due and has found no significant evidence to
indicate that the Purchaser will not continue to pay its debts as they become
due in the future. The Owner understands that the transfer of a Residual
Certificate may not be respected for United States income tax purposes (and
the Owner may continue to be liable for United States income taxes associated
therewith) unless the Owner has conducted such an investigation.
6. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement.
F-2-6
IN WITNESS WHEREOF, the Owner has caused this instrument to be executed on
its behalf, pursuant to the authority of its Board of Directors, by its [Vice]
President, attested by its [Assistant] Secretary, this ____ day of
___________, 20__.
[OWNER]
By:_____________________________________
Name:
Title: [Vice] President
ATTEST:
By:___________________________________
Name:
Title: [Assistant] Secretary
Personally appeared before me the above-named , known or proved to me
to be the same person who executed the foregoing instrument and to be a [Vice]
President of the Owner, and acknowledged to me that [he/she] executed the same
as [his/her] free act and deed and the free act and deed of the Owner.
Subscribed and sworn before me this ____ day of __________, 20__.
_________________________________
Notary Public
County of _______________________
State of __________________
My Commission expires:
F-2-7
EXHIBIT G
FORM OF CERTIFICATION WITH RESPECT TO ERISA AND THE CODE
_____________, 20__.
---------------------------------------------------------------- -----------------------------------------------------
Asset Backed Securities Corporation Fairbanks Capital Corp.
Eleven Madison Avenue 0000 Xxxxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxxx Xxxx Xxxx, Xxxx 00000
---------------------------------------------------------------- -----------------------------------------------------
Xxxxx Fargo Bank Minnesota, N.A.
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
---------------------------------------------------------------- -----------------------------------------------------
Re: Asset Backed Securities Corporation
Asset Backed Pass Through Certificates,
Series 2002-HE2, Class [B-IO] [X] [P]
----------------------------------------
Dear Sirs:
__________________________________ (the "Transferee") intends to acquire
from _____________________ (the "Transferor") $____________ Initial
Certificate Principal Balance of Asset Backed Securities Corporation, Asset
Backed Pass-Through Certificates, Series 2002-HE2, Class [B-IO], [X], [P],
(the "Certificates"), issued pursuant to a Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement") dated as of May 1, 2002 among Asset
Backed Securities Corporation, as depositor (the "Depositor"), DLJ Mortgage
Capital, Inc., as seller (the "Seller"), Fairbanks Capital Corp., as servicer
(the "Servicer") and Xxxxx Fargo Bank Minnesota, N.A., as trustee (the
"Trustee"). Capitalized terms used herein and not otherwise defined shall have
the meanings assigned thereto in the Pooling and Servicing Agreement. The
Transferee hereby certifies, represents and warrants to, and covenants with
the Depositor, the Trustee, and the Servicer that the following statement is
accurate:
The Certificates (i) are not being acquired by, and will not be
transferred to, any employee benefit plan within the meaning of section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or other retirement arrangement, including individual
retirement accounts and annuities, Xxxxx plans and bank collective
investment funds and insurance company general or separate accounts in
which such plans, accounts or arrangements are invested, that is subject
to Section 406 of ERISA or Section 4975 of the Internal Revenue Code of
1986 (the "Code") (any of the foregoing, a "Plan"), (ii) are not being
acquired with "plan assets" of a Plan within the meaning of the
Department of Labor ("DOL") regulation, 29 C.F.R. ss. 2510.3-101, and
(iii) will not be transferred to any entity that is deemed to be
investing plan assets within the meaning of the DOL regulation at 29
C.F.R. ss. 2510.3-101.
G-1
Very truly yours,
_______________________________________
By:___________________________
Name:
Title:
G-2
EXHIBIT H
FORM OF SUBSEQUENT TRANSFER AGREEMENT
THIS SUBSEQUENT TRANSFER AGREEMENT, dated as of [_____], 2002 (this
"Subsequent Transfer Agreement"), among ASSET BACKED SECURITIES CORPORATION, a
Delaware corporation, as depositor (the "Depositor"), DLJ MORTGAGE CAPITAL,
INC., a Delaware corporation, as seller (the "Seller"), FAIRBANKS CAPITAL
CORP., a Utah corporation, as servicer (the "Servicer") and XXXXX FARGO BANK
MINNESOTA, N.A., a national banking association, as trustee (the "Trustee");
WHEREAS, the parties hereto are also among the parties to the Pooling
and Servicing Agreement dated as of May 1, 2002 specified above (the "Pooling
and Servicing Agreement") among the Depositor, DLJ Mortgage Capital, Inc., as
seller (the "Seller"), Fairbanks Capital Corp., as servicer (the "Servicer")
and the Trustee in relation to the ABSC Series 2002-HE2, Asset Backed
Pass-Through Certificates, Series 2002-HE2;
WHEREAS, Sections 2.01(c) of the Pooling and Servicing Agreement
provides for the parties hereto to enter into this Subsequent Transfer
Agreement in accordance with the terms and conditions of the Pooling and
Servicing Agreement;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt and adequacy of which are hereby
acknowledged the parties hereto agree as follows:
(a) The "Subsequent Transfer Date" and "Subsequent Cut-off Date"
with respect to this Subsequent Transfer Agreement shall be
[__________], 2002.
(b) The "Aggregate Subsequent Transfer Amount" with respect to
this Subsequent Transfer Agreement shall be $[___________],
provided, however, that such amount shall not exceed the
amount on deposit in the Pre-Funding Account.
(c) The Subsequent Mortgage Loans conveyed on the Subsequent
Transfer Date shall satisfy the pool characteristics for the
Trust Fund identified in Section 2.01(c) of the Pooling and
Servicing Agreement.
(d) In case any provision of this Subsequent Transfer Agreement
shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions or
obligations shall not in any way be affected or impaired
thereby.
(e) In the event of any conflict between the provisions of this
Subsequent Transfer Agreement and the Pooling and Servicing
Agreement, the provisions of the Pooling and Servicing
Agreement shall prevail. Capitalized terms used herein
H-1
and not otherwise defined have the meanings in the Pooling
and Servicing Agreement.
(f) The Seller hereby sells, transfers, assigns, sets over
and otherwise conveys to the Depositor, without recourse, all
right title and interest in the Subsequent Mortgage Loans
identified in Schedule A, including all interest and principal
due on or with respect to such Subsequent Mortgage Loans on or
after the Subsequent Cut-off Date and all interest and
principal payments on such Subsequent Mortgage Loans received
prior to the Subsequent Cut-off Date in respect of installments
of interest and principal due thereafter, but not including
principal and interest due on such Subsequent Mortgage Loans
prior to the Subsequent Cut-off Date, any insurance policies in
respect of such Subsequent Mortgage Loans and all proceeds of
any of the foregoing.
(g) The Servicer hereby agrees to service the Subsequent
Mortgage Loans in accordance with the terms and conditions set
forth in the Pooling and Servicing Agreement.
(h) This Subsequent Transfer Agreement shall be governed by, and
shall be construed and enforced in accordance with the laws of
the State of New York.
(i) This Subsequent Transfer Agreement may be executed in one or
more counterparts each of which so executed and delivered shall
de deemed an original, but all such counterparts together shall
constitute but one and the same instrument.
H-2
IN WITNESS WHEREOF, the parties to this Subsequent Transfer Agreement
have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
ASSET BACKED SECURITIES CORPORATION,
as Depositor
By:____________________________________________
Name:
Title:
DLJ MORTGAGE CAPITAL, INC.,
as Seller
By:____________________________________________
Name:
Title:
XXXXX FARGO BANK MINNESOTA, N.A.,
not in its individual capacity, but solely as
Trustee
By:____________________________________________
Name:
Title:
FAIRBANKS cAPITAL cORP.,
as Servicer
By:____________________________________________
Name:
Title:
H-3
EXHIBIT I
LETTER AGREEMENT
May [__], 2002
Xxxxx Fargo Bank Minnesota, N.A., as Trustee
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Ladies and Gentlemen:
Reference is made to a Pooling and Servicing Agreement (the "Agreement"),
dated as of May 1, 2002, among Asset Backed Securities Corporation, as
Depositor, DLJ Mortgage Capital, Inc., as Seller, Fairbanks Capital
Corporation, as Servicer and Xxxxx Fargo Bank Minnesota, N.A., as Trustee (the
"Trustee"). Capitalized terms used but not defined herein shall have the
respective meanings assigned thereto in the Agreement. All references to Long
Beach herein are references to Long Beach Mortgage Company ("Long Beach") in
its capacity as the Originator of the Long Beach MortgageLoans under the
Agreement.
With respect to the Long Beach Mortgage Loans, Long Beach hereby makes
the representations and warranties contained in Schedule A hereto as of
December 22, 1998 to and for the benefit of the Trustee. In addition, Long
Beach hereby represents and warrants to and for the benefit of the Trustee as
of the December 22, 1998 that (i) no Long Beach Mortgage Loan was subject to
the Home Ownership and Equity Protection Act of 1994 or any comparable state
law, (ii) no proceeds from any Long Beach Mortgage Loan were used to finance
single-premium credit insurance, and (iii) no Long Beach Mortgage Loan under
the terms of this Agreement will impose a prepayment premium for a term in
excess of five years. In the event of a breach of one of these representations
and warranties, Long Beach hereby agrees that it shall abide by the repurchase
and substitution provisions set forth in Section 2.03 of the Agreement as if
fully set forth at length herein.
If notified by the Trustee or DLJ Mortgage Capital, Inc. ("DLJMC") that
any document in the Mortgage File relating to a Long Beach Mortgage Loan is
missing or defective, in any material respect and such defect existed, or such
document was missing, on or prior to December 22, 1998, Long Beach shall
deliver such missing document or cure such defect as required by Section 2.03
of the Agreement. If Long Beach does not deliver such missing document or cure
such defect in all material respects during such period, Long Beach shall
repurchase such Long Beach Mortgage Loan from the Trust Fund at the Purchase
Price. In connection with any such purchase of a Long Beach Mortgage Loan,
Long Beach shall follow the procedure set forth in Section 2.03 of the
Agreement. If such defect existed, or such document was missing, after
December 22, 1998, DLJMC shall have the obligations pursuant to this paragraph
to cure or purchase such Long Beach Mortgage Loan.
DLJMC hereby represents and warrants to and for the benefit of the
Trustee as of the date hereof, that nothing has occurred since December 22,
1998 to cause any of the representations
I-1
and warranties on Schedule A to this letter (other than representation and
warranty (iv) set forth in such Schedule A) and the additional representations
and warranties made by Long Beach set forth in the second paragraph above to
be untrue as of the date hereof with respect to the Long Beach Mortgage Loans.
DLJMC hereby agrees that, in the event that there is a breach of the
representation in the preceding sentence, DLJMC shall abide by the repurchase
and substitution provisions set forth in Section 2.03 of the Agreement as if
fully set forth at length herein.
I-2
Please acknowledge your acceptance and agreement to the foregoing by
signing and returning the enclosed copy of this letter agreement to us.
Very truly yours,
LONG BEACH MORTGAGE COMPANY
By:_____________________________________
Name:
Title:
DLJ MORTGAGE CAPITAL, INC.
By:_____________________________________
Name:
Title:
Agreed to and accepted:
XXXXX FARGO BANK MINNESOTA, N.A.,
not in its individual capacity but
solely as Trustee for the Asset Backed
Securities Corporation Home Equity Loan
Trust, Series 2002-HE2
By: ________________________________
Name:
Title:
I-3
Schedule A
----------
Representations and Warranties
Capitalized terms used in this letter but not defined in this Schedule A
or in this letter shall have the meanings ascribed thereto in the Agreement.
The following representations and warranties are only applicable to the Long
Beach Mortgage Loans.
6. The information set forth on the Mortgage Loan Schedule with respect to
each Long Beach Mortgage Loan is true and correct in all material
respects;
7. Each related Mortgage is a valid and enforceable first lien on the
related Mortgaged Property, including all improvements thereon, subject
only to (a) the lien of nondelinquent current real property taxes and
assessments, (b) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of recording
of such Mortgage, such exceptions appearing of record being acceptable to
mortgage lending institutions generally or specifically reflected in the
appraisal made in connection with the origination of the related Long
Beach Mortgage Loan, and (c) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of
the security intended to be provided by such Mortgage;
8. Immediately prior to the assignment of the Long Beach Mortgage Loans to
DLJMC pursuant to a purchase agreement, dated as of September 1, 1998,
between the DLJMC and Long Beach, Long Beach had good title to, and was
the sole legal and beneficial owner of, each Long Beach Mortgage Loan
free and clear of any pledge, lien, encumbrance or security interest and
has full right and authority, subject to no interest or participation of,
or agreement with, any other party to sell and assign the same;
9. To the best of Long Beach's knowledge, there is no delinquent tax or
assessment lien against any related Mortgaged Property;
10. There is no valid offset, defense or counterclaim to any related Mortgage
Note or Mortgage, including the obligation of the Mortgagor to pay the
unpaid principal of or interest on such Mortgage Note, nor will the
operation of any of the terms of the Mortgage Note and the Mortgage, or
the exercise of any right thereunder, render the Mortgage unenforceable,
in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury and no such right
of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
11. To the best of Long Beach's knowledge, there are no mechanics' liens or
claims for work, labor or material affecting any related Mortgaged
Property which are or may be a lien prior to, or equal with, the lien of
the related Mortgage, except those which are insured against by the title
insurance policy referred to in 10. below;
12. To the best of Long Beach's knowledge, each Mortgaged Property is free of
material damage and is in average repair;
I-4
13. Each Long Beach Mortgage Loan at origination complied in all material
respect with applicable local, state and federal laws, including, without
limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws, and consummation of the
transactions contemplated hereby will not involve the violation of any
such laws;
14. Neither Long Beach nor any prior holder of any related Mortgage has
modified such Mortgage in any material respect (except that a Long Beach
Mortgage Loan may have been modified by a written instrument which has
been recorded, if necessary, to protect the interests of the Trustee and
which has been delivered to the Trustee); satisfied, cancelled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage; or
executed any instrument of release, cancellation, modification or
satisfaction with respect thereto;
15. A lender's policy of title insurance together with a condominium
endorsement and extended coverage endorsement, if applicable, and an
adjustable rate mortgage endorsement in an amount at least equal to the
principal balance of each Long Beach Mortgage Loan as of December 1,
1998, or a commitment (binder) to issue the same was effective on the
date of the origination of each Long Beach Mortgage Loan, each such
policy is valid and remains in full force and effect, the transfer of the
related Long Beach Mortgage Loan to CSFBMC has not affected the validity
or enforceability of such policy and each such policy was issued by a
title insurer qualified to do business in the jurisdiction where the
Mortgaged Property is located and insures Long Beach and successor owners
of indebtedness secured by the insured Mortgage, as to the first priority
lien of the Mortgage; to the best of Long Beach's knowledge, no claims
have been made under such mortgage title insurance policy and no prior
holder of the related Mortgage, including Long Beach, has done, by act or
omission, anything which would impair the coverage of such mortgage title
insurance policy;
16. Each Long Beach Mortgage Loan was originated by Long Beach or by a
savings and loan association, savings bank, commercial bank, credit
union, insurance company or similar institution which is supervised and
examined by a federal or state authority, or by a mortgagee approved by
the Secretary of Housing and Urban Development pursuant to sections 203
and 211 of the National Housing Act and, if originated on behalf of Long
Beach by a Person other than Long Beach, is subject to the same standards
and procedures used by Long Beach in originating mortgage loans directly;
17. With respect to each Long Beach Mortgage Loan on each Adjustment Date, if
any, the Mortgage Rate will be adjusted to equal LIBOR plus the margin,
rounded to the nearest 0.125%, subject to the periodic rate cap, the
Maximum Mortgage Rate and the Minimum Mortgage Rate. The related Mortgage
Note is payable on the first day of each month in self-amortizing monthly
installments of principal and interest, with interest payable in arrears,
and requires a Monthly Payment which is sufficient to fully amortize the
outstanding principal balance of the Long Beach Mortgage Loan over its
remaining term and to pay interest at the applicable Mortgage Rate. No
Long Beach Mortgage Loan is subject to negative amortization. All rate
adjustments have been performed in accordance with the terms of the
related Mortgage Note or subsequent modifications, if any;
I-5
18. To the best of Long Beach's knowledge, all of the improvements which were
included for the purpose of determining the appraised value of the
related Mortgaged Property lie wholly within the boundaries and building
restrictions lines of such property, and no improvements on adjoining
properties encroach upon the Mortgaged Property;
19. All inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of the related Mortgaged Property
and, with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy, have been made or obtained from the
appropriate authorities and the Mortgaged Property is lawfully occupied
under applicable law;
20. All parties which have had any interest in the related Mortgage, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) in compliance
with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located;
21. The Mortgage Note and the related Mortgage are genuine, and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms and with applicable laws. All parties to the
Mortgage Note and the Mortgage had legal capacity to execute the Mortgage
Note and the Mortgage and each Note and Mortgage have been duly and
properly executed by such parties;
22. With the exception of the Hold-back Loans (as defined below), the
proceeds of each Long Beach Mortgage Loan have been fully disbursed,
there is no requirement for further advances thereunder and any and all
requirements as to completion of any on-site or off-site improvements and
as to disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making, closing or recording the
Long Beach Mortgage Loans were paid. A "Hold-back Loan" means a Long
Beach Mortgage Loan with respect to which a portion of the loan proceeds
are held back from the Mortgagor until required repairs or improvements
on the Mortgaged Property are completed;
23. The related Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the
security, including, (i) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (ii) otherwise by judicial foreclosure.
There is no homestead or other exemption available to the Mortgagor which
would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage;
24. With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no
fees or expenses are or will become payable by the Trustee to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
25. Reserved;
26. There exist no deficiencies with respect to escrow deposits and payments,
if such are required, for which customary arrangements for repayment
thereof have not been made, and
I-6
no escrow deposits or payments of other charges or payments due Long Beach
have been capitalized under the Mortgage or the related Mortgage Note;
27. The origination, underwriting and collection practices used by Long Beach
with respect to each Long Beach Mortgage Loan have been in all respects
legal, proper, prudent and customary in the mortgage servicing business;
28. There is no pledged account or other security other than real estate
securing the Mortgagor's obligations;
29. No Long Beach Mortgage Loan has a shared appreciation feature, or other
contingent interest feature;
30. No Long Beach Mortgage Loan provides for primary mortgage insurance;
31. The improvements upon each Mortgaged Property are covered by a valid and
existing hazard insurance policy with a generally acceptable carrier that
provides for fire extended coverage and such other hazards as are
customary in the area where the Mortgaged Property is located
representing coverage not less than the lesser of the outstanding
principal balance of the related Long Beach Mortgage Loan or the minimum
amount required to compensate for damage or loss on a replacement cost
basis. All individual insurance policies and flood policies referred to
in clause 27 below contain a standard mortgagee clause naming Long Beach
or the original mortgagee, and its successors in interest, as mortgagee,
and Long Beach has received no notice that any premiums due and payable
thereon have not been paid; the Mortgage obligates the Mortgagor
thereunder to maintain all such insurance, including flood insurance, at
the Mortgagor's cost and expense, and upon the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to obtain and maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor;
32. If the related Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Mortgaged Property with
a generally acceptable carrier in an amount representing coverage not
less than the least of (A) the outstanding principal balance of the Long
Beach Mortgage Loan, (B) the minimum amount required to compensate for
damage or loss on a replacement cost basis or (C) the maximum amount of
insurance that is available under the Flood Disaster Protection Act of
1973;
33. There is no default, breach, violation or event of acceleration existing
under the Mortgage or the related Mortgage Note; and Long Beach has not
waived any default, breach, violation or event of acceleration;
34. Each related Mortgaged Property is improved by a one- to four-family and
multifamily residential dwelling, including condominium units and
dwelling units in planned unit developments, which, to the best of Long
Beach's knowledge, does not include cooperatives or mobile homes and does
not constitute other than real property under state law; and the
Mortgaged Property is either a fee simple estate or a long-term
residential lease;
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35. If the Long Beach Mortgage Loan is secured by a long term residential
lease, (1) the lessor under the lease holds a fee simple interest in the
land; (2) the terms of such lease expressly permit the mortgaging of the
leasehold estate, the assignment of the lease without the lessor's
consent and the acquisition by the holder of the Mortgage of the rights
of the lessee upon foreclosure or assignment in lieu of foreclosure or
provide the holder of the Mortgage with substantially similar
protections; (3) the terms of such lease do not (a) allow the termination
thereof upon the lessee's default without the holder of the Mortgage
being entitled to receive written notice of, and opportunity to cure,
such default, (b) allow the termination of the lease in the event of
damage or destruction as long as the Mortgage is in existence, (c)
prohibit the holder of the Mortgage from being insured (or receiving
proceeds of insurance) under the hazard insurance policy or policies
relating to the Mortgaged Property or (d) permit any increase in rent
other than pre established increases set forth in the lease; (4) the
original term of such lease is not less than 15 years; (5) the term of
such lease does not terminate earlier than five years after the maturity
date of the Mortgage Note; and (6) the Mortgaged Property is located in a
jurisdiction in which the use of leasehold estates in transferring
ownership in residential properties is a widely accepted practice;
36. Reserved;
37. There is no obligation on the part of Long Beach or any other party under
the terms of the related Mortgage or related Mortgage Note to make
payments in addition to those made by the Mortgagor;
38. Any future advances made prior to December 1, 1998, have been
consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term reflected on the Mortgage
Loan Schedule. The consolidated principal amount does not exceed the
original principal amount of the Long Beach Mortgage Loan;
39. Each Long Beach Mortgage Loan was underwritten in accordance with Long
Beach's underwriting guidelines as described in the prospectus supplement
of Asset Backed Securities Corporation dated as of May 24, 2002, relating
to the Asset Backed Securities Corporation Home Equity Loan Trust
2002-HE2;
40. The Mortgage File contains an appraisal which was performed by an
appraiser who satisfied, and which was conducted in accordance with, all
of the applicable requirements of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended;
41. None of the Long Beach Mortgage Loans is a graduated payment Mortgage
Loan, nor is any Long Beach Mortgage Loan subject to a temporary buydown
or similar arrangement;
42. With respect to each Long Beach Mortgage Loan, no loan junior in lien
priority to such Long Beach Mortgage Loan and secured by the related
Mortgaged Property was originated by Long Beach at the time of
origination of such Long Beach Mortgage Loan;
43. Reserved;
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44. The Mortgage contains an enforceable provision for the acceleration of
the payment of the unpaid principal balance of the Long Beach Mortgage
Loan in the event that the Mortgaged Property is sold or transferred
without the prior written consent of the mortgagee thereunder;
45. Long Beach has not advanced funds, or induced, solicited or knowingly
received any advance of funds by a party other than the mortgagor,
directly or indirectly, for the payment of any amount required under the
Long Beach Mortgage Loan;
46. There is no proceeding pending, or to the best of Long Beach's knowledge
threatened, for the total or partial condemnation of the related
Mortgaged Property or the taking by eminent domain of any Mortgaged
Property securing a Long Beach Mortgage Loan;
47. None of the Long Beach Mortgage Loans are classified as "high cost" loans
under Section 32 of the Home Ownership and Equity Protection Act of 1994;
48. With respect to any Long Beach Mortgage Loan which is a Long Beach
Mortgage Loan originated in the State of Texas, any and all applicable
requirements of Section 50, Article XVI of the Texas Constitution which
were in effect at the time of the originationof such Long Beach Mortgage
Loan have been complied with. Specifically, without limiting the
generality of the foregoing,
1. all fees paid by the owner of the Mortgaged Property or such owner's
spouse, to any person, that were necessary to originate, evaluate,
maintain, record, insure or service the Long Beach Mortgage Loan are
reflected in the closing statement for such Long Beach Mortgage Loan;
2. the Long Beach Mortgage Loan was closed only at the office of the
originating lender, an attorney at law, or a title company;
3. the originating lender has not been found by a federal regulatory
agency to have engaged in the practice of refusing to make loans
because the applicants for the loans reside or the Mortgaged Property
proposed to secure the loans is located in a certain area;
4. the owner of the Mortgaged Property was not required to apply the
proceeds of the Long Beach Mortgage Loan to repay another debt except
debt secured by the Mortgaged Property or debt to a lender other than
the originating lender;
5. the owner of the Mortgaged Property did not sign any documents or
instruments relating to the Long Beach Mortgage Loan in which blanks
were left to be filled in; and
6. if discussions between the originating lender and the borrower were
conducted primarily in a language other than English, the originating
lender provided to the owner of the Mortgaged Property, prior to
closing, a copy of the notice required by Section 50(g), Article XVI
of the Texas Constitution translated into the written language in
which the discussions were conducted;
49. The Loan-to-Value Ratio for each Long Beach Mortgage Loan was no greater
than 90%, at the time of origination; and
I-9
50. The first date on which each Mortgagor was required to make a payment on
the related Long Beach Mortgage Loan is no later than January 1, 1999.
I-10
EXHIBIT J
PERFORMANCE STANDARDS
Subject to the ramp-up time set forth in paragraph F below, the
following servicing performance standards (the "Performance Standards") shall
be applicable to the Servicer:
a. Outbound Calling and Collection Calls. As further described
below, in respect of Mortgage Loans for which foreclosure
actions have not been commenced, and for which Servicer has no
notice of litigation or pre-litigation claims, Servicer shall
make telephone calls to Mortgagors according to the following
schedule:
1. Welcome Calls. At least three attempts during the first
thirty (30) days following the Cut-Off Date.
2. Collection Calls, first 18 days of month. At least one
attempt every other Business Day at a 25% Right Party
Contact Rate.
3. Collection Calls, after the 18th day of the month. At
least two attempts every other Business Day at 25% Right
Party Contact Rate.
A further explanation of the Servicer's Calling Program is as
follows:
Welcome Calls. Welcome calls will be made regardless of the
Mortgagor's Delinquency status. If a borrower is Delinquent in the
first month following the Cut-Off Date, the calling programs
described below for collection calls will also be followed.
Collection Calls -- First 18 Days of the Month. These calls are made
for all Mortgage Loans that are past due between the first and 18th
day of the month, except for loans that are screened out from such
calls for reasons including, but not limited to: loans in
bankruptcies, loans where the early indicator scoring model
indicates the historical payment date is prior to the 18th of the
month and loans for which borrowers have requested in writing that
the Servicer not contact them.
Collection Calls -- after the 18th Day of the Month but Not Yet in
Foreclosure. These calls are made for all Mortgage Loans that are
Delinquent after the 18th day of the month, except for loans that
are screened out from such calls for reasons including, but not
limited to: bankruptcies, loans in foreclosure loans for which
Mortgagors have requested in writing that the Servicer not contact
them; and loans where the early indicator scoring model indicates
the historical payment date is the 18th of the month.
b. Written Correspondence. The Servicer will prepare and deliver
the following written correspondence.
1. Early Late Notices. The Servicer will mail a late notice
to all Mortgagors once they are 5 days past their due
date, except for the following loans that are screened out
for such written correspondence for reasons including, but
not limited to, bankruptcies, interim payments in the
first 30 days after transfer and loans for which the
historical average payment date is before the 15th day of
delinquency; and loans which have been analyzed by EI
scoring.
2. Twenty Day Collection Letter. The Servicer will mail a
20-day delinquency letter on the 20th day of delinquency.
J-1
3. Demands. When applicable, Servicer will send a demand
letter and intent to foreclose via certified mail on the
33rd day of delinquency.
c. Foreclosure Time Lines.
1. For Mortgage Loans in foreclosure, the Servicer will meet
or improve upon the foreclosure timeline measured in the
aggregate on a rolling three month weighted average basis,
by loan count across all states. The Servicer will use the
more stringent of the Xxxxxx Xxx or Xxxxxxx Mac
foreclosure time lines as may be amended from time to
time, in each state, based on the standard with the
shortest time lines. Servicer will not be penalized with a
reduction in fees for unavoidable delays including
bankruptcy filing, missing assignments and necessary
collateral documents, contested actions, service of
process delays, sheriff sale scheduling delays, court
delays in entering judgment or scheduling hearing, and
other circumstances agreed to by Owner, provided that
Servicer has documented its system accordingly.
d. Pre-foreclosure Resolution Rate
1. A "Pre-foreclosure Resolution" will be obtained for at
least 55% of the Mortgage Loans (by number of Mortgage
Loans) for which Foreclosure actions have commenced (a
"Defaulted Mortgage Loan"), measured on a rolling
three-month average basis. The Pre-foreclosure Resolution
percentage described in the preceding sentence shall be
calculated as of the number of Pre-foreclosure Resolutions
divided by the sum of the number of Pre-foreclosure
Resolutions plus the number of Mortgage Loans converting
to REO Property during the previous three months. REO
Property shall not include Mortgage Property taken back by
the Servicer pursuant to a deed-in-lieu of foreclosure.
2. A "Pre-foreclosure Resolution" shall mean any of the
following:
Full reinstatement means any Defaulted Mortgage Loan for
which the Mortgagor brings the Mortgage Loan back to a
contractually current status either through a lump sum
payment or otherwise consistent with the terms of the
related Servicing Agreement.
Full payoff means any Defaulted Mortgage Loan which is
paid in full and such payment in full is received by the
Servicer in full satisfaction of the indebtedness owed
under the applicable Mortgage Note.
Short Liquidation means a Defaulted Mortgage Loan for
which a final payment in an amount less than the
indebtedness owed under the applicable Mortgage Note is
made consistent with the terms of the related Servicing
Agreement and such payment is received by the Servicer in
full satisfaction of such indebtedness, including as the
result of any short sale, short refinance, or Mortgage
Note sale.
Deed-in-Lieu of Foreclosure means a Defaulted Mortgage
Loan for which title to the Mortgaged Property is taken
back by the Servicer through deed-in-lieu of foreclosure
and the resulting REO Property is liquidated consistent
with the terms of the related Servicing Agreement.
Modification (subject to REMIC restrictions) means a
Defaulted Mortgage Loan which is modified in a manner
consistent with the related Servicing Agreement.
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Performing Forbearance Plan means a Defaulted Mortgage
Loan for which a Mortgagor has entered into a forbearance
plan for the repayment of the indebtedness owed under the
applicable Mortgage Note.
Take-out at Foreclosure Sale means the Mortgaged Property
related to a Defaulted Mortgage Loan that is purchased at
a foreclosure sale by a party other than the Servicer (or
by Servicer on behalf of the owner of the loan) in a
manner consistent with the related Servicing Agreement.
e. REO Sales
1. With respect to those REO Properties being managed by the
Servicer, the Servicer will sell at least 15% of the
sellable REO Properties (by number of Mortgage Loans) on a
monthly basis and obtain "average net proceeds" of at
least 88% of the low market value reflected in the
indication of value, in each case measured on a rolling 3
month average basis.
2. "Average net proceeds" means proceeds from sale after
brokerage costs and closing costs.
3. The Servicer will not be subject to a performance standard
with respect to REO Sales for REO Properties managed by an
REO Manager (other than the Servicer) selected by the
Owner.
f Ramp-up Time
The Servicer shall endeavor to meet the Performance Standards
contained herein as soon as possible after the Cut-Off Date, but shall not be
considered to be in default under the Servicing Agreement unless it fails a
performance standard starting during the applicable period reflected in the
table below. For those performance standards measured on an average or
weighted average three-month rolling basis, the Servicer shall not be
considered in default under the Servicing Agreement unless it fails such
performance standard after completion of the applicable three-month period.
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RAMP-UP PERIODS
-------------------------------------------- ---------------------- ----------------------
Applies First 90 Applies After
Performance Standard Days 90 Days
-------------------------------------------- ---------------------- ----------------------
Welcome Call Attempts Yes N/A
-------------------------------------------- ---------------------- ----------------------
1 - 18 Day Call Attempts Yes Yes
-------------------------------------------- ---------------------- ----------------------
1 - 18 Day Right Party Hits No Yes
-------------------------------------------- ---------------------- ----------------------
18+ Day Call Attempts Yes Yes
-------------------------------------------- ---------------------- ----------------------
18+ Day Right Party Hits No Yes
-------------------------------------------- ---------------------- ----------------------
Written Correspondence (All) Yes Yes
-------------------------------------------- ---------------------- ----------------------
Pre-foreclosure Resolution Yes Yes
-------------------------------------------- ---------------------- ----------------------
Foreclosure Timeline Yes Yes
-------------------------------------------- ---------------------- ----------------------
REO Liquidation Rate Yes Yes
-------------------------------------------- ---------------------- ----------------------
REO Proceeds Yes Yes
-------------------------------------------- ---------------------- ----------------------
J-4
Schedule 1
----------
MORTGAGE LOAN SCHEDULE
FILED BY PAPER
[ON FILE WITH THE CUSTODIAN]
[Part A - New Century Mortgage Corporation]
[Part B - WMC Mortgage Corp.]
[Part C - Long Beach Mortgage Company]
[Part D - DLJMC Mortgage Loans]
Schedule 2
PREPAYMENT CHARGE SCHEDULE
[TO BE PROVIDED UPON REQUEST]
